Mehabe score: 3 G Factor: 2 Piotski Score: 1 The stock has a rating OBSERVE & HOLD. The mehabe team score is reflective of its fundamental and technical merits. A rating above 8 is considered good buy. The stock has a G-Factor of 2 and Piotski score of 1.
Description
Bharat Heavy Electricals is an integrated power plant equipment manufacturer engaged in design, engineering, manufacture, erection, testing, commissioning and servicing of a wide range of products and services for the core sectors of the economy, viz. Power, transmission, Industry, Transportation, renewable Energy, Oil & Gas and Defence.(Source : 202003 Annual Report Page No:254)Site:BHEL
Market Cap:
Rs 26,533 cr
Price:
76.2
Trading pe:
x
Book-value:
78.1/share
Div yield:
0.00 %
Earning yield:
-9.83%
Face-value:
2.00/share
52week high:
79.55
52week low:
26.75
Technical Analysis
Stock trades at 76.2, above its 50dma 63.16. It also trades above its 200dma 47.83. The stock remains bullish on techicals
The 52 week high is at 79.55 and the 52week low is at 26.75
Price Chart
P/E Chart
Sales and Margin
Strengths
– Stock is trading at 0.98 times its book value
Weakness
– has low interest coverage ratio.
-The company has delivered a poor sales growth of -7.26% over past five years.
– has a low return on equity of -0.04% for last 3 years.
-Contingent liabilities of Rs.8118.47 Cr.
Competition
– The industry trades at a mean P/E of 25.8x. A B B trades at the industry’s max P/E of 146.01x. BHEL trades at a P/E of x
– Industry’s mean G-Factor is 3.0 while the mean Piotski score is 8.0. BHEL has a G-Factor of 2 and Piotski scoreof 1.
– Average 1 month return for industry is 9.3%. The max 1- month return was given by V-Guard Industri: a return of 19.32 %
Quarterly Results
Sales for period ended Mar 2021 is Rs 7170.0 cr compared to Rs 5050.0 cr for period ended Mar 2020, a rise of 42.0%
Company reported negative operating profit of Rs -1268.0 cr for period ended Mar 2021. For same period last year, operating profit was -560.0
The EPS for Mar 2021 was Rs -2.97 compared to Rs -0.62 for previous quarter ended Dec 2020 and Rs -4.4 for Mar 2020
Profit & Loss Statement
Profit&Loss Comments
Company reported sales of Rs 17309.0 cr for period ended Mar 2021 vis-vis sales of Rs 21490.0 cr for the period ended Mar 2020, a fall of 24.2%. The 3 year sales cagr stood at -15.6%.
Operating margins shrank to -18.0% for period ended Mar 2021 vis-vis -1.0% for period ended Mar 2020, contraction of 1700.0 bps.
Net Profit reported at Rs -2697.0 cr for period ended Mar 2021 vis-vis sales of Rs -1466.0 cr for the period ended Mar 2020, falling 0%.
Balance Sheet Statement
Cash Flow Statement
Cash Flow comments
CashFlow from operating activities: Rs 0.0 cr for period ended Mar 2021 vis-vis Rs -2892.0 cr for period ended Mar 2020
Sales Growth
Profit Growth Statement
Profit Growth Statement
Stock Price CAGR
Return of Equity
General Comments
– The company has worsened on its Return on Equity (RoE) metric. The RoE on Last Year basis was -5.0% compared to -0.0% over the last 3 Years. – The stock has given a return of 154% on a 1 Year basis vis-vis a return of -1% over the last 3 Years. – The compounded sales growth on a TTM bassis is -43% vis-vis a compounded sales growth of -9% over the last 3 Years. – The compounded profit growth on a TTM basis is -527% vis-vis a compounded profit growth of % over the last 3 Years.
Ratios
Shareholding Pattern
– FII shareholding has remained largely constant. The Mar 2021 fii holding stood at 4.47% vis-vis 4.34% for Dec 2020 – Public shareholding has remained largely constant. The Mar 2021 public holding stood at 19.87% vis-vis 18.98% for Dec 2020
Conclusion
– Stock is trading at 0.98 times its book value – has low interest coverage ratio.
-The company has delivered a poor sales growth of -7.26% over past five years.
– has a low return on equity of -0.04% for last 3 years.
-Contingent liabilities of Rs.8118.47 Cr.
Fundamentally, the stock remains weak on business fundamentals. Weak near term results have dampened and questioned business drivers. We suggest to wait for a upturn in business performance.
Technically, the stock trades above its 50 DMA 63.16 and is trading at 76.2 It has shown near term bullish momentum contrary to business fundamentals. We suggest to observe price action. However as investors, who like to avoid timing the markets, we suggest to avoid the stock
