Bharat Heavy Electricals Limited (BHEL) shares soared as much as 16.66 per cent on Wednesday after the company posted 54.21 per cent increase in its net profit at Rs 77.77 crore for the quarter ended June 30, 2016 as compared to Rs 50.43 crore in the same quarter last year. Total income of the company jumped by 20.84 per cent to Rs 5,871.78 crore for the quarter under review from Rs 4,858.95 crore in the same quarter last fiscal. Later, the scrip closed 15.50 per cent up at Rs 159.80.
The scrip opened the day at Rs 138 and has touched a high and low of Rs 161.40 and Rs 134.35, respectively, in trade so far. Benchmark BSE Sensex was trading 37.54 points down at 28940.48.
Oflate, India Ratings and Research downgraded BHEL’s long-term issuer rating to ‘IND AA+’ from ‘IND AAA’. Simultaneously, all ratings have been removed from Rating Watch Negative (RWN) and a negative outlook has been assigned to all long-term ratings. The removal of RWN follows the completion of the ongoing evaluation of BHEL’s key business parameters.
In the past one year, shares of the company slipped 31.15 per cent to Rs 138.35 till September 6, whereas BSE Sensex gained 16.41 per cent during the same period.
Top line of the company has declined by 47 per cent during 2012-13 and 2015-16 on account of low order intake over FY12-FY15 and the presence of slow moving projects worth nearly Rs 50,000 crore in its order book in FY16.
According to India Ratings, the negative outlook reflects the rating agency’s expectations of a further revenue decline over FY17, if issues related to the slow moving order book are not resolved. BHEL has been looking at diversifying its revenue base into areas such as defence, water, transportation, transmission and industrial products, to lower its dependence on the power sector.