BHEL Up 6% on New Or­ders, Jury Out on Road Ahead

The Economic Times - - Companies -

Mum­bai : B h a r a t H e av y Elec­tri­cals (BHEL) sur­prised the mar­ket with a 6% jump on Thurs­day af­ter it re­ported a 42% in­crease in new or­ders in FY16. But will it be enough to pull the power equip­ment ma­jor out of its trou­bles? The jury is still out on that one.

BHEL re­ported the high­est-ever com­mis­sion­ing of new projects and high­est or­der book­ing in five years. It also re­ported pro­vi­sional net loss of ₹ 877 crore ver­sus net profit of ₹ 1,419 crore a year ago. BHEL e n d e d March 2016 with anorder­back­log of ₹ 1,10,000 crore. Its shares, which had fallen 70% from a high of ₹ 290 in June last year to ₹ 90 in March, gained 6% on Thurs­day and closed at ₹ 119.30, up 33% from re­cent lows. “The com­pany had a de­cent or­der book but lot of its projects were stuck. Now with the gov­ern­ment’s ini­tia­tives on clear­ing stuck projects, one ex­pec­ta­tion is im­ple­men­ta­tion will pick up,” said Sandip Sabharwal, in­vest­ment ad­vi­sor.

“BHEL looks cheap at 0.8 times P/B, 0.15 times EV/OB with free cash flow yield of 6-13%,” said Ab h i s h e k P u r i , a n a l y s t , Deutsche Bank. G Chokkalingam, founder of Equinomic Re­search, how­ever, said that the rally will not last. “It is fac­ing stress on its work­ing cap­i­tal, hence it’s very dif­fi­cult to make money,” he said.

Co re­ported pro­vi­sional net loss of 877 crore ver­sus net profit of 1,419 crore a year ago

Newspapers in English

Newspapers from India

© PressReader. All rights reserved.