BHEL share price tumbles 20% on weak Q4 results; stock may fall another 55%, say analysts

BHEL reported weak outcomes on execution, gross margin and dealing capital.

Bharat Heavy Electricals Ltd (BHEL) share value tumbled as a lot as 18 per cent to Rs 62.55 apiece in intraday on BSE, after the corporate reported lower-than-expected Jan-Mar quarter outcomes. At NSE, the inventory plummeted 20 per cent. BHEL’s consolidated web loss narrowed to Rs 1,036.32 crore within the March quarter in opposition to a web lack of Rs 1,532.18 crore within the year-ago interval. Following the weak set of quarter numbers, many of the analysts and brokerage homes hinted at an additional fall within the share value. Motilal Oswal has a value goal of Rs 40, Kotak Institutional Equities pegged the worth goal at Rs 34, and Nirmal Bang has a goal of Rs 48, with ‘promote’ score to it. This suggests an additional fall of as much as 55 per cent.

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Motilal Oswal Financial Services
Goal: 48 per cent draw back

The brokerage agency mentioned that BHEL continued to wrestle with a weak ordering surroundings within the Energy sector, excessive receivables and large FY21 worker value. In FY21, working capital stood elevated 101 per cent of gross sales, weighed by the next stock and receivables and poor execution. The brokerage home added that larger fastened value has dented working efficiency, with the working loss attributable to under-absorption of prices. The corporate is but to indicate a major enchancment in pending receivables, with whole debtors at Rs 313b in FY21.

Kotak Institutional Equities
Goal: 55.38 per cent draw back

BHEL reported weak outcomes on execution, gross margin and dealing capital. If not for the discount in revenues and associated launch of working capital, it might have reported the third straight 12 months of detrimental money move from operations, the brokerage agency mentioned. The big provisions/write-off taken solid doubts on the flexibility to launch the remaining working capital. The weak gross margin casts doubts on the flexibility to report top-line excessive sufficient to cowl fastened prices.

Nirmal Bang
Goal: 37 per cent draw back

With a rising desire for renewable vitality technology, Nirmal Bang is structurally detrimental on thermal energy capability addition in India. Key upside triggers for BHEL are sudden revival in thermal energy capex, new enterprise segments successful large-sized orders, favorable final result of worldwide EOIs (strategic partnerships/takeover of belongings) and enchancment within the receivables place. BHEL’s share value has doubled YTD and the inventory is presently buying and selling at 24x FY23 EPS. The brokerage agency believes such sharp re-rating within the final six months is unwarranted amid muted ordering prospects. Nevertheless, order wins within the Oil & Fuel phase is encouraging in its view.

(The inventory suggestions on this story are by the respective analysis analysts and brokerage companies. Monetary Specific On-line doesn’t bear any duty for his or her funding recommendation. Capital markets investments are topic to guidelines and laws. Please seek the advice of your funding advisor earlier than investing.)