Bharat Heavy Electricals Limited (BHEL), which is run by the government, will release its results for the time that ended on March 31, 2023. Analysts predict that the company’s sales will go up, but its profit and EBITDA may go down year-on-year (YoY), even though EBITDA margins will go up.
The people in the market say that they expect gross margins to go up by more than 500 basis points (bps). But the earnings may go up from quarter to quarter (QoQ). The most important thing to know is what management thinks about new sales, thermal power, Vande Bharat, and margins.
ICICI Securities estimates that BHEL’s revenue is Rs 8,922.2 crore, which is up 10.7% YoY and 6.1% QoQ. The company’s gross margin is 34.7%, which is up 555 bps quarterly. Its EBITDA is expected to be Rs 1,281.2 crore, which is up 11% YoY and QoQ. Its EBITDA margin is expected to be 3%, which is up 122 basis points YoY and 765 basis points QoQ. Profit before taxes is expected to be Rs. 696.5 crore, which is down 23.4% YOY.
We expect BHEL’s EBITDA to go up because of the padding done during the quarter. ICICI Securities said that margin growth and account receivables would be the key to keeping BHEL as one of its top picks in the sector.
Antique Stock Broking thinks that BHEL will report a revenue of Rs 9,146.2 crore, which is up 13.5% YoY and 73.8% QoQ, and an EBITDA of Rs 1,424.6 crore, which is up 23.75% YoY. The company could report a PAT of Rs 128.3 crore, which is down 54.8% YoY but up 8.4% QoQ.
On Friday, BHEL fell about 3% to Rs 79.05 as traders waited for the company’s earnings report. In the past year, the price has gone up about 60%, but so far in 2023, it hasn’t changed.
Prabhudas Lilladher thinks that BHEL’s sales for the QFY23 will be Rs 9,213.4 crore, which is an increase of 14.3% YoY. However, its EBITDA is expected to be Rs 355.3 crore, which is a drop of 69.2% YoY. The company may record PAT of Rs 210.3 crore, which is down 76.9% year-over-year but up 578.3% quarter-over-quarter. The stock has a’sell’ tag and a goal price of Rs 36 from the brokerage firm.
Execution is likely to improve, which will lead to a rise in revenue. Key things to watch will be how the management talks about execution speed, working capital, order flow, diversification into non-power segments, and margins. The numbers for Q4FY22 included the reversal of allowances, which made PAT higher. EBITDA profits are expected to be 3.9%, down from 14.3% a year ago.
For the whole year of FY23, Nuvama Institutional Equities expects to make 24.600 crore in sales and have an EBITDA profit of 3.1%. EPS is expected to be Rs 1.1, and the return on equity is expected to be 1.5%. The brokerage firm changed BHEL’s rating to “hold” and set a price goal of Rs 80 for April 2023. They did this because they expect thermal orders to rise over the next few years.
