Order inflow activity is constrained by overcapacity in power generation, sectoral issues (fuel supply, still inefficient distribution infrastructure) as well as strong competition (even though list of competitors seems smaller).
BHELs Q4 flash results reflect deteriorating metrics. BHEL reported in-line sales of R15,500 crore. This represents a 22% y-o-y fall against 18% y-o-y fall over nine months of FY14. BHEL commissioned 13.4 GW of power plants for the full year, up 30% y-o-y (including 11.2 GW for utilities). The companys Q4 PBT at R2,360 crore was significantly lower than our R3,000 crore estimate. Assuming reasonable estimates for other income and depreciation, this implies an ebitda margin of 15.3% in Q4 versus our estimate of 19.6% (down 700 bps y-o-y versus 600 bps y-o-y fall in Q3). Year-on-year results are not comparable this year because of BHPV merger. PAT at R1,600 crore fell 50% y-o-y (similar decline in full-year PAT). We note ~2-2.5% average revision in annual PBT results (actual versus flash) over the past seven years, suggesting a larger impact at a quarterly level.