Bharat Heavy Electricals Ltd (BHEL) share value tumbled as a great deal as 18 per cent to Rs 62.55 apiece in intraday on BSE, right after the corporation reported reduced-than-anticipated Jan-Mar quarter final results. At NSE, the stock plummeted 20 per cent. BHEL’s consolidated net loss narrowed to Rs 1,036.32 crore in the March quarter against a net loss of Rs 1,532.18 crore in the year-ago period. Following the weak set of quarter numbers, most of the analysts and brokerage homes hinted at a additional fall in the share value. Motilal Oswal has a value target of Rs 40, Kotak Institutional Equities pegged the value target at Rs 34, and Nirmal Bang has a target of Rs 48, with ‘sell’ rating to it. This implies a additional fall of up to 55 per cent.
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Motilal Oswal Financial Services
Target: 48 per cent downside
The brokerage firm mentioned that BHEL continued to struggle with a weak ordering atmosphere in the Power sector, higher receivables and large FY21 employee price. In FY21, working capital stood elevated 101 per cent of sales, weighed by a larger inventory and receivables and poor execution. The brokerage home added that larger fixed price has dented operating overall performance, with the operating loss attributable to below-absorption of fees. The corporation is but to show a substantial improvement in pending receivables, with total debtors at Rs 313b in FY21.
Kotak Institutional Equities
Target: 55.38 per cent downside
BHEL reported weak final results on execution, gross margin and working capital. If not for the reduction in revenues and connected release of working capital, it would have reported the third straight year of adverse money flow from operations, the brokerage firm mentioned. The huge provisions/create-off taken cast doubts on the capacity to release the remaining working capital. The weak gross margin casts doubts on the capacity to report leading-line higher sufficient to cover fixed fees.
Target: 37 per cent downside
With a increasing preference for renewable power generation, Nirmal Bang is structurally adverse on thermal energy capacity addition in India. Key upside triggers for BHEL are sudden revival in thermal energy capex, new small business segments winning huge-sized orders, favorable outcome of worldwide EOIs (strategic partnerships/takeover of assets) and improvement in the receivables position. BHEL’s share value has doubled YTD and the stock is at present trading at 24x FY23 EPS. The brokerage firm believes such sharp re-rating in the last six months is unwarranted amid muted ordering prospects. However, order wins in the Oil & Gas segment is encouraging in its view.
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