BHEL Q2 net up 64% at Rs268 cr; focus shifts to non-power business

State-run power equipment maker BHEL reported a 64 per cent year-on-year increase in its net profit for fiscal second quarter ended 30 September to Rs268 crore, on the back of better operational performance.

BHEL had reported a net profit of Rs109 crore for the year-ago quarter.

Revenue during the quarter increased by 2.6 per cent to Rs6,841 crore, against Rs6,664 crore in comparable quarter of the previous fiscal.

Earnings before interest, tax, depreciation and amortisation (EBITDA) grew 81 per cent to Rs281 crore and margin nearly doubled to 4 per cent from 2 per cent year-on-year.

Margin expansion may be led by favourable operating leverage and lower legacy order. Analysts expect EBIT in power and industrial segments to be at 12 per cent and 7.5 per cent, respectively.

The shareholders of the company at its annual general meeting on 22 September 2017 had approved the issue of bonus shares in the ratio of 1:2, ie, one equity share for two existing fully-paid equity shares held. Accordingly the company issued 122,38,00,000 equity shares of Rs2 each on 3 October 2017.

Post bonus issue, the company's share capital consists of 367,14,00,000 equity shares of Rs2 each amounting to Rs734.28 crore.

Accordingly, the earnings per share for the quarter and half year ended 30 September 2017 and comparative periods presented have also been computed on the basis of post-bonus share capital.

BHEL said its profit for the quarter improved due to more orders being executed.

However, BHEL said going forward continued constraint on execution due to operational issues; and trends in provisions, particularly for liquidated damages on project completion would be key to watch out for.

BHEL is aiming to double its non-power revenue by 2022 and the projects will be executed on a turnkey basis.

The areas like municipal water, Ganga mission, solar, aerospace, defence and metro and high speed rail projects have been identified as growth drivers.

Currently, power and associated business contribute 80 per cent of the revenue for the company, while the rest 20 per cent have been generated by the Railways and other electrical products.