12 August 2014
1QFY15 Results Update | Sector:
Equity Shares (m)
M.Cap. (INR b) / (USD b)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
1QFY15 operational performance better than estimates
1QFY15 operational performance was better than estimates with Revenues at
INR51b (down 21% YoY, 8% below est) and EBIDTA margins at 4.3% (down 180bp
YoY, vs est of 2.9%). PAT at INR 1.9b, down 58% YoY, was higher than estimates of
INR762m (down 58%) and is supported by other income at INR3.5b / lower tax
rates at 21% (given R&D benefits).
Power segment BTB
stood at 2.5x in 1QFY15 (from lows of 2.3x in Sept 13); we
expect bounce back to 3.0x in FY15. We believe that improvement in BTB is an all
important trend, and has ramifications on several cyclical components. Rising
trend in debtors had been arrested (down 6% QoQ).
in 1QFY15 stood at just INR11b, given the elections. BHEL is
favorably positioned in ~4GW of projects. During FY15, expect 16-17GW of
project awards (vs 6GW YoY).
in 1QFY15 stood at just INR510m (vs INR2.4b YoY) and thus SGA
expenses have been curtailed. Provisions / LDs accounted for 7.5% of revenues in
FY14 vs 4.0% in FY13; and with improved liquidity / accelerated execution, we
expect stabilization in these factors to more normative levels.
was up 7% YoY given impact of BHPV merger; expect retirements at
2,200 employees in FY15 (of which 729 have retired in 1QFY15).
Financials & Valuation (INR Million)
2015E 2016E 2017E
36,228 49,603 62,823
24,587 37,321 48,362
Net Sales 323,738 356,813 397,098
BTB remains steady 2.5x: election impasse impacts 1QFY15 order finalization
Costs supported by cyclical factors; expect retirements at ~2,200 in FY15
Valuations and view
with Price Target of INR300/sh (20x FY16E).
(AgarwalS@MotilalOswal.com); +91 22 3982 5410
Investors are advised to refer through disclosures made at the end of the Research Report.