BHEL Q2 results: PSU likely to report losses today; stock down 22% in a month

Bharat Heavy Electricals Ltd (BHEL), whose shares have fallen 22 per cent in the last one month, is likely to report narrowing of year-on-year (YoY) losses in the September quarter. This would be the second straight quarter of losses for the PSU. BHEL, which announced strong thermal power order inflows in Q2, is seen reporting over 20 per cent jump in revenues for the quarter.

BHEL’s Q2 revenue to grow 22 per cent YoY, with healthy execution across both Power and Industry segments, said PL Capital. The brokerage said Ebitda margin for BHEL may improve 780 basis points, aided by employee cost leverage and administrative costs. Order prospects in thermal power and defence, gross margin, HVDC tendering, and overall execution pace will be the key monitorables it said.

This brokerage sees BHEL to report narrowing of losses to Rs 42.40 crore in Q2 from a loss of Rs 233.40 crore in the same quarter last year. It sees sales rising 21.80 per cent YoY to Rs 6,242.60 crore from Rs 5,125.30 crore YoY.

BHEL shares settled at Rs 216.95 on Friday, down 4.51 per cent. The scrip is up 9.38 per cent in 2024 so far against a 22.47 per cent jump in the BSE PSU index.

BHEL recorded strong order intake in Q2FY25, including Rs 13,300 crore for Koderma thermal power station from DVC, Rs 11,000 crore for supply of equipment for 3 projects of Adani Power, and Rs 6,200 crore from NTPC for EPC of Sipat thermal power project.

Kotak Institutional Equities expects BHEL to report adjusted loss at Rs 201.20 crore. It sees a negative Ebitda margin of 2.1 per cent in the seasonally weak quarter and factors in gross margin at FY2024 full-year level. It expects sales for BHEL climbing 21 per cent YoY to Rs 6,202.30 crore, driven by power and industrial segments.

As of YTDFY25, BHEL has received orders for 10 GW of projects. There are 8 GW of tenders that remain active presently. JM Financial expects them to finalise by March 2025 given the sense of urgency in government for capacity additions.

Additionally, there are 39 GW of projects that are under various stages of clearance, it noted.

"With a growing order book (bagged 1.3GW/ 9.6GW/ 10.4GW during FY23/FY24/YTDFY25), limited competitive environment (8 GW under tendering, 39GW under clearances) and, pick-up in execution, we anticipate BHEL to regain its profitable growth trajectory from 3QFY25 and to deliver revenue, Ebitda and PAT CAGR of 34 per cent, 150 per cent and 233 per cent, respectively, over FY24-26E. We continue to maintain Buy on the stock with a target of Rs 361," JM Financial said.