India News
Search Web Directory
News Home
BHEL announces Rs 16.28 bn buyback; should you tender your shares?
Posted on 29th October 2018
Last week, Bharat Heavy Electricals (BHEL) announced a buyback of its 189.3 million equity shares (nearly 5.16 per cent of the paid up equity share capital) at Rs 86 apiece, amounting to Rs 16.28 billion. The buyback price is at around 28 per cent premium to the current market price of Rs 67 on the Bombay Stock Exchange (BSE).

Analysts believe investors should subscribe for the buyback offer, as the long-term outlook of the business remains a concern. Given the working capital stress and the attractive buyback price, they suggest investors use the opportunity to tender their shares.

“The buyback offer is at significant premium to current market price. That apart, there is a severe working capital stress. Receivables and inventories are more than the annual revenue. One should surrender their shares,” says G Chokkalingam, founder and managing director at Equinomics Research.

On a year-to-date (YTD) basis, shares of the state-run power equipment manufacturer have dropped around 27 per cent in comparison to about 2 per cent decline in the S&P BSE Sensex, ACE Equity data show.

For the September quarter of financial year 2018 – 19 (Q2FY19), the 60 per cent jump BHEL’s net profit at Rs 1.9 billion fell short of Street expectations. Analysts at Motilal Oswal Securities, for instance, expected the company to clock in a PAT of Rs 2.9 billion. They maintain a ‘sell’ rating on the stock with a target price of Rs 60, which is nearly 43 per cent lower than the proposed buyback price.

That apart, new orders could be an issue going ahead given the upcoming general elections in the next calendar year. Analysts at Emkay Global observe that even though BHEL had reported a 159 per cent year-on-year improvement in order bookings in the first half of FY19 (H1FY19), it expects the aggregate inflows in FY19E to decline by 25 per cent to Rs 308 billion (Rs 409 billion in FY18).

“While management is expecting an order pipeline of nearly 8-10 GW (valued at nearly Rs 500 billion) in the power sector, we have factored in nearly 5GW of ordering in FY19. It is pertinent to note that order finalisations are likely to slow down in the next six months ahead of major elections in H1CY19,” the brokerage said in its report.

Analysts at ICICI Securities also believe that elevated receivables pose liquidity challenge for the company. Bhel’s total receivables in Q2FY19 have gone up to Rs 389 billion, of which, receivables for the current quarter alone stood at Rs 203.54 billion (218 days). Increase in receivables, they said, was due to deferred payments by state and central utilities.

That apart, structural challenges in the power sector continue to pose long term risks to business, analysts say. "RoE (return on equity) and RoIC (return on invested capital) at nearly 2 per cent indicates poor return ratios while the valuation is not cheap as the stock is trading at P/E multiple of 25(x)," says Satish Kumar, senior research analyst for fundamental research, at Choice Broking.

Related Companies: BHEL   

Other Latest News
This helicopter company stock zooms 112% in six weeks
Posted on 18th April 2019
Shares of Global Vectra Helicorp surged 9 per cent to Rs 127 in the intra-day trade on Thursday, gaining 53 per cent in the last one week on the BSE, on expectation of strong earnings growth. The stock was trading close to its 52-week high of Rs 131 on April 23, 2018 on the BSE.

In past three weeks, the stock has rallied 112 per cent from level of Rs 60.30 on March 8, 2019, as compared to 7 per cent rise in the S&P BSE Sensex.

Hyundai eyes leadership position in compact SUV segment: MD
Posted on 18th April 2019
Hyundai Motor India is eyeing a leadership position in the compact SUV segment in the country with its upcoming model Venue, a top company official said.

The company will face stiff competition in the sub-4 metre compact SUV segment from the likes of Maruti Suzuki Vitara Brezza, Tata Motors Nexon, Mahindra XUV300 and Honda WR-V.

Mahindra, Ford to co-develop mid-sized SUV for India, emerging markets
Posted on 18th April 2019
Mahindra & Mahindra (M&M) and Ford Motor Company on Thursday said they have signed a definitive agreement to co-develop a mid-sized SUV for India and other emerging markets.

The new agreement reinforces the steady progress made since the announcement of a strategic alliance between the two companies in September 2017, followed by an announcement on powertrain sharing and connected car solutions in October 2018.

JustDial data leak exposed personal details of 100 million users: IT expert
Posted on 18th April 2019
Justdial, a company that provides local search for different services in India over voice calls and internet, suffered a data breach last week that compromised the personal details of 100 million users, according to independent cyber-security researcher Rajshekhar Rajaharia.

Inc42 quoted a senior JustDial executive on Monday as saying that the company is investigating the alleged loopholes in its database and that the company's systems are foolproof.

Now, Mamata Banerjee objects to no non-veg on Air India
Posted on 18th April 2019
Chief Minister Mamata Banerjee launched a new attack front against Prime Minister Narendra Modi on Wednesday and registered a delayed protest against the decision to stop serving non-vegetarian food to economy class passengers of Air India's domestic flights.

Air India does not serve non-vegeterian food in economy class. Only business class passengers are entitled to have chicken. Why will Modi babu decide what others will eat? the firebrand leader lashed out when addressing a public meeting at Kandi in Murshidabad.

» Post a FREE Classified Advertisement
Inviting Real Estate Agents, Job Placements Agents, Educational Institutes, Software Service Providers, Real Estate Builders, Marriage Bureaus, Travel Agents, Restaurant Owners, Health & Fitness Centers and other Local Businesses to Post a FREE Classified Advertisement on Classifieds Website.
Jobs in India India Real Estate Automobiles Matrimonials Beauty & Fitness

Add a comment for BHEL announces Rs 16.28 bn buyback; should you tender your shares?
Please only use this form to enter comments on the above company. All comments are reviewed before they are displayed on the web site. Not all comments may be displayed. Check back with us to see if your comments have been displayed.
If you want us to email the comments posted by users, please Subscribe by email
Security Code*

Be the first person to write a business review for BHEL announces Rs 16.28 bn buyback; should you tender your shares?

Most Read News

Depite being humiliated, DMK has joined hands with Cong: PM Modi in Tamil Nadu

Uber nears deal with Softbank-led group for self-driving car unit: Report

Anil Ambani firm got €143.7 mn tax relief from France after Rafale announcement: Le Monde report

Out of cash and desperate: Low-cost airline Jet Airways may stop flying

Priyanka Gandhi ready to contest against PM Modi from Varanasi: Sources

More India News

  India Web Directory
Business Profiles
Automotive Directory
IT/ITES/BPO Directory
Hotel Directory
Health Directory
Business Directory
Gems & Jewellery
Education Directory
Real Estate Directory
Agriculture Directory
Logistics Directory
Yellow Pages
NRI Guide
Photo Galleries
Global Web Directory
*** FREE India Classifieds
Order Premium Listings
Submit a Site
Business Reviews
About us
Link to us
Contact us
Google Search Keywords: India Catalog, IndiaCatalog, India Web Directory
    © 1999 - 2019
    All Rights Reserved
Privacy Statement