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BHEL rated underperform by Jefferies as results were well below expectations
Posted on 14th November 2017
BHEL’s 2QFY18 results came in well below expectations with a reported EBITDA loss. Company would have reported a loss if not for the 98% y-o-y rise in other income to Rs 6 billion. Other expenses rose 36% y-o-y (ex of Rs 2.5 billion wage revision expense) on a 4% y-o-y revenue decline. Management indicated there is no one-off expense in the same. Given no visibility on material reduction in debtors or market pie expansion, we maintain Underperform. Giving benefit of revenue recovery due to Yadadri BHEL’s revenues declined 4% y-o-y to Rs 63 billion v/s expectations of a 7% y-o-y rise. Management didn’t really highlight GST implementation as a reason for revenue deferment, but discussed general revenue recognition milestones impacting the same. In October, 2017, BHEL announced that execution has begun on the Rs 204 billion, 5×800 MW, Yadadri project from the Telangana government. We have assumed revenue recovery is driven by execution on this earlier slow-moving project and maintain our FY18E-19E estimates for now.

Order book down 6% y-o-y BHEL’s order flow declined 6% y-o-y to Rs 19 billion, with limited orders from export markets. Management maintained that the industry pipeline is around 10 GW, and the company is L-1 on orders to the tune of Rs 260 billion. This mainly includes NTPC’s 2400 MW Patratu plant, 660 MW Panki plant and 660 MW Bhusawal plant. These orders are needed to meet our annual expectations of Rs 353 billion. Order book declined y-o-y, which does raise concerns on medium-term revenue visibility.

Gross margin improvement offset by other expenses Gross margins rose 260 bps y-o-y in FY17 to 40.5%. 2QFY18 is 38.9%, with management highlighting it is likely to stabilise at these levels. However, sharp 36% y-o-y rise in other expenses is offsetting this impact at the EBITDA level. We have 50-100 bps y-o-y gross margin improvement in FY18E and FY19E.

We do not expect a material upside to this from current levels. However, if other expenses is not contained in 2HFY18E, it could lead to downside risk to our estimates in FY18E-19E. Valuation/Risks We believe BHEL’s business model remains flawed as overcapacity will mean sub-10% medium-term ROE. Maintain Underperform, with a DCF based TP of Rs 67. Upside risks: 1) BHEL cutting fixed costs aggressively; and 2) pricing improves.

Related Companies: BHEL   

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Isro ahead of TCS among top-rated tech workplaces in India: Report
Posted on 11th December 2018
Technology professionals look towards Indian Space Research Organization (ISRO) as a more aspirational tech workplace than software major Tata Consultancy Services (TCS), according to a report by job search portal Indeed.

Indeed announced the leading technology organisations to work for in India, on the basis of over 100 million ratings and reviews available on Indeed. Leading the list is Adobe Inc., followed by industry giants NVIDIA and Microsoft.


Telangana polls: TRS on course to retaining power if initial trends hold
Posted on 11th December 2018
The TRS was on course to return to power with a thumping majority in Telangana if the initial trends hold, with party candidates leading in 92 out of the total 119 assembly constituencies.

TRS chief K Chandrasekhar Rao (Gajwel), his son K T Rama Rao (Sircilla) and nephew T Harish Rao (Siddipet) have established handsome leads, as the party's gamble to go in for early elections seems to be paying off.


Air India floats tender to sell Nariman Point tower
Posted on 11th December 2018
Mumbai: Air India has floated tender for the sale of its iconic 23-storey tower at Nariman Point in Mumbai. Only government entities are allowed to participate in the bidding for acquiring leasehold rights of the land and building on “as is where is basis.”

“Air India invites sealed bids from government entities for sale of leasehold rights of the land, and its iconic Air India building constructed hereon at Nariman Point, Mumbai, on as is where is basis,” the tender said.


Extradition of once king of good times’ Vijay Mallya from UK to speed up loan recovery process, says SBI
Posted on 11th December 2018
Countrys largest lender State Bank of India (SBI) Tuesday said extradition of fugitive liquor baron Vijay Mallya from the UK to India will speed up the recovery of over Rs 9,000 crore of loans. In a major boost to India’s efforts to bring back Mallya, who is wanted for loan default worth around Rs 9,000 crore to a consortium of 13 banks led by SBI, a UK court Monday ordered his extradition.

Tata Motors aims Harrier at Jeep Compass, Mahindra XUV500
Posted on 11th December 2018
New Delhi: Tata Motors Ltd, which is on a comeback trail, is betting big on its upcoming SUV Tata Harrier to place itself among the top three passenger vehicle manufacturers on a sustainable basis, a top company executive said.The company, which has been working on a strategy to revive its fortunes in the passenger vehicle (PV) segment for the last couple of years, now believes it has the products and scale to be among the leaders in the segment.

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