BHEL hits 21-month low

In past four months, the stock has fallen 40% from Rs 283 to Rs 169, as compared to 8% decline in the Sensex.

Shares of Bharat Heavy Electricals Limited (BHEL) has dipped 2% to Rs 169, its lowest level since March 2014 on the BSE.

In past four months, the stock has fallen 40% from Rs 283 on August 8, as compared to 8% decline in the S&P BSE Sensex.

The power equipment maker had reported a standalone net loss of Rs 205 crore for the July-September quarter of 2015-16 (FY16), its first quarterly loss for a more than one decade.  It had posted a net profit of Rs 125 crore for the quarter ended September 30, 2014.

For the first half April-September of FY16, the company had reported net loss of Rs 171 crore against profit of Rs 318 crore in the same period last fiscal.

Material cost during H1FY16 increased by 630bps to 69% while employee benefits remained stable rather, other expenses increased by 305bps to 17.3%, together dragged earnings before interest, taxes, depreciation and amortization (EBITDA) into losses during H1FY16 reach to Rs 684 crore compared to EBITDA profit of Rs 510 crore during H1FY15, according to brokerage firm Karvy Stock Broking Research.

“We believe our estimates fairly reflect impact of material cost along with possible impact of yet-to-be-announced pay commission coming in during FY17E driving return ratio, returns on capital employed (RoCE), to reach to 2.2% by FY17E. Hence, we revise our price target to Rs 144 on the stock”, analysts said in a report dated November 9, 2015.

At 02:23 PM, the stock was down 1.6% at Rs 170 as compared to 0.42% decline in the S&P BSE Sensex. A combined 3.59 million shares changed hands on the BSE and NSE so far.