BHEL Shares Fall Even As It Turns Profitable In Q2
While underlying business operations were unprofitable in Q2, the company managed to report a profit.
Shares of Bharat Heavy Electricals Ltd. dropped despite the company turning profitable in the second quarter.
BHEL reported a net profit of Rs 12.10 crore in the three months ended September compared with a loss of Rs 46.6 crore over a year earlier, according to its exchange filing.
Other income for the quarter rose fourfold year-on-year to Rs 216.17 crore. Power segment sales contributed to the higher income.
BHEL Q2 FY23 Highlights (YoY)
Revenue from operations rose to Rs 4,927.95 crore as against Rs 4,910.62 crore, as overall sales from the power segment grew.
Sales from the power segment were higher at Rs 3,814.4 crore, compared with Rs 3,586.3 crore a year earlier.
Industry segment sales were lower at Rs 1,113.6 crore as against Rs 1,324 crore.
Operating loss for the period widened to Rs 518.54 crore from Rs 231.5 crore due higher expenses.
Operating margins were lower at -10.52%, compared with -4.71% a year earlier.
According to an Axis Capital report, there was an all-around profit and loss miss in the second quarter. Revenue was flat, with no pick-up in execution even post-Covid-19. While underlying business operations were loss-making in Q2, the company managed to report a profit, the report said.
BHEL has signed pacts to jointly set up a coal-to-ammonium nitrate project with Coal India and a lignite-based gasification pilot plant with NLC India for power generation.
Axis Capital has retained a 'sell' rating with a target price of Rs 36, implying a 51% potential downside.
The total traded quantity is 2.0 times the 30-day average.
Of the 21 analysts tracking the company, three maintain a 'buy,' three suggest a 'hold,' and 15 recommend a 'sell', according to Bloomberg data. The return potential of the stock implies a downside of 26.6%.
Shares of BHEL fell 4.57% to 72.05 apiece compared with a 0.04% gain in the benchmark Nifty 50 at 2:37 p.m.