Bharat Heavy Electricals Limited (BHEL) posted a decline of 25.6 per cent year-on-year (YoY) in its consolidated net profit for the fourth quarter of FY24. The company reported a net profit of Rs 489.62 crore against Rs 658.02 crore reported in the same quarter of corresponding year. However, the state-owned power generation equipment manufacturer experienced a marginal increase of 0.4 per cent in its revenue from operation as the company’s revenue from operations stood at Rs 8260.25 crore in Q4 FY24 against Rs 8226.99 crore recorded in the same quarter of FY23.
BHEL’s earnings before interest, tax, depreciation, and amortisation (EBITDA) fallen by 30.6 per cent to Rs 727.9 crore in Q4 FY24 against Rs 1049 crore in the same quarter of previous year.
BHEL’s revenue remained flat
According to Amit Anawani, Research Analyst at Prabhudas Lilladher, BHEL’s standalone revenue was flattish YoY as healthy growth in industry segment sales offset the decline in power segment sales, that is -4.3 per cent YoY. PAT declined 24.9 per cent YoY due to the weak operating performance which was partially offset by higher other income and a lower effective tax rate. “Power margin improved to 19.4 per cent against 18.6 per cent in Q4FY23, while industry margin declined sharply to 8.5 per cent against a high base of 21.2 per cent in Q4FY23,” Anawani added.
BHEL’s order book
BHEL reported an order inflow (OI) of Rs 780 billion. OI for the quarter was Rs 420 billion. FY24 saw strong order inflows worth Rs 520 billion in power owing to 9.6 GW thermal order wins and Industry orders worth Rs 220 billion. ICICI Securities estimate 50GW of coal-based capacity to be more than 40 years old by FY32. It stated that BHEL is trying to diversify its order book and has recently, in consortium with Titagarh Wagons, won a Vande Bharat order worth Rs 235 billion to supply 80 trainsets and service them for 35 years thereafter. BHEL’s share in the order is at Rs 150 billion. “We expect more Vande Bharat orders in the next two-three years, where BHEL again stands to benefit from its experience,” analysts at ICICI Securities said.
Meanwhile, Sudhanshu Bansal from JM Financial said, “With a healthy and executable order book (Rs 1300 billion) and continued momentum in tendering of new projects in a limited competitive environment, we expect the company to gradually regain its growth trajectory, Q3FY25 onwards.”
Further, per ICICI Securities, India’s peak demand is likely to be 375GW by FY32, at 6 per cent CAGR or 330GW at 5 per cent CAGR (as per national electric plan-2022). “Anticipating additional peak demand, the government too is looking to add 75GW of storage and add 50GW of thermal. Storage is still at a nascent stage with ~20 per cent operational capacity >40 years by 2032. In our opinion, India may, therefore, need to build a stronger arsenal of thermal power plants to ensure smooth energy transition. Our conviction of the need to add more coal-based thermal capacity was recently validated when India’s Minister of Power (RK Singh) mentioned the need to have 80GW of thermal capacity under construction in order to meet India’s power needs in the future. Thus, we believe India may need to add 5GW of coal-based thermal capacity every year for the next ten years,” ICICI Securities said.
JM Financial too added that the government plans to add 88GW of thermal power projects by FY32. 10 GW of projects have already been tendered out and another 27GW are under tendering. The company expects 10-12GW of annual ordering during the next few years.