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BHEL Performance Highlights (` cr) 1QFY12 1QFY11 % chg (yoy) 4QFY11 % chg (qoq) Revenue
BHEL Performance Highlights (` cr) 1QFY12 1QFY11 % chg (yoy) 4QFY11 % chg (qoq) Revenue

BHEL

Performance Highlights

(` cr)

1QFY12

1QFY11

% chg (yoy)

4QFY11

% chg (qoq)

Revenue

7,272

6,601

10.2

18,380

(60.4)

EBITDA

1,113

965

15.4

4,294

(74.1)

EBITDA margin (%)

15.3

14.6

70bp

23.4

(805)bp

PAT

816

668

22.1

2,798

(70.9)

Source: Company, Angel Research

BHEL reported a subdued performance for 1QFY2012. The company registered moderate growth of 10.2% yoy to `7,272cr (11.9% lower than our estimates of `8,251cr). However, operating performance remained stable – EBITDA margin came in at 15.3% (est. 14.5%), while the bottom line bettered our expectations by posting 22.1% yoy growth to `816cr (`668cr). We remain Neutral on the stock.

Power’s down – but positive surprise on the profitability front: For 1QFY2012, the company’s revenue posted moderate growth of 10.2% yoy on account of lower execution. Operating costs were efficiently managed – raw-material and employee costs as a percentage of revenue remained lower at 57.1% and 17.9%, respectively, compared to 1QFY2011. EBITDA grew by 15.4% yoy to `1,113cr (`965cr), partly facilitated by the 70bp yoy margin expansion. Higher depreciation and interest expenses shadowed the gains but were offset by strong other income of `249cr (`163), which resulted in 22.1% yoy growth in PAT to `816cr, exceeding our estimates of `785cr.

Outlook and valuation: While BHEL rides high on a strong order book, the execution process may witness structural delays (delayed takeoffs) on the back of challenges outlined in the power sector. In addition, coal supply concerns weigh heavily on new power projects, which will cascade to lower equipment demand, thereby impacting the order inflow. Further, given the intensifying competition from domestic as well as overseas players, we believe it will be difficult for BHEL to maintain its existing profitability margins and current market share in the long term. The attractive valuations of 13.7x FY2012E EPS and 12x FY2013E EPS are largely overshadowed on account of the aforementioned woes. Likewise, the FPO element will remain an overhang in the near term, thereby providing a limited upside. Given the long-term structural concerns, we remain Neutral on the stock.

Key financials

Y/E March (` cr)

FY2010

FY2011

FY2012E

FY2013E

Net sales

33,355

42,496

49,743

57,080

% chg

24.8

27.4

17.1

14.8

Adj. net profit

4,311

5,413

6,678

7,736

% chg

37.9

25.6

23.4

15.8

EBITDA (%)

17.4

21.1

19.7

19.9

EPS (`)

88.1

110.6

136.4

158.0

P/E (x)

21.8

17.4

13.4

11.5

P/BV (x)

5.9

4.7

3.6

3.0

RoE (%)

29.9

30.0

29.4

27.3

RoCE (%)

36.7

46.3

40.0

37.3

EV/Sales (x)

2.6

2.0

1.6

1.3

EV/EBITDA (x)

14.5

9.4

7.9

6.6

Source: Company, Angel Research

1QFY2012 Result Update | Capital Goods

July 27, 2011

NEUTRAL

CMP

`1,825

Target Price

-

Investment Period

Stock Info

Sector Market Cap (` cr)

 

Capital Goods

 

89,332

Beta

0.8

52 Week High / Low

2,695/1,873

Avg. Daily Volume

699,348

Face Value (`)

10

BSE Sensex

18,432

Nifty

5,547

Reuters Code
Reuters Code

BHEL.BO

Bloomberg Code

BHEL@IN

Shareholding Pattern (%)

 

Promoters

67.7

MF / Banks / Indian Fls

 

16.9

FII / NRIs / OCBs

13.2

Indian Public / Others

2.2

Abs. (%)

3m

1yr

3yr

Sensex

(5.2)

2.0

29.1

BHEL

(9.7)

(25.5)

10.3

Hemang Thaker

+91 22 3937 7800 Ext: 6817 hemang.thaker@angelbroking.com

Exhibit 1: Quarterly performance BHEL | 1QFY2012 Result Update (` cr) 1QFY12 1QFY11 % chg

Exhibit 1: Quarterly performance

BHEL | 1QFY2012 Result Update

(` cr)

1QFY12

1QFY11

% chg (yoy)

4QFY11

% chg (qoq)

FY11

FY10

% chg (yoy)

Net Sales

7,126

6,480

10.0

17,921

(60.2)

41,579

32,880

26.5

Other operating income

146

121

-

459

-

916.65

692.51

-

Total income

7,272

6,601

10.2

18,380

(60.4)

42,495

33,573

26.6

Stock adjustments

(431)

(125)

667

(127)

(787)

Raw Material

4,581

3,935

16.4

8,293

(44.8)

22,671

20,094

12.8

(% of total income)

57.1

57.7

48.7

53.0

57.5

Employee Cost

1,301

1,338

(2.7)

1,460

(10.9)

5,410

5,243

3.2

(% of total income)

17.9

20.3

7.9

12.7

15.6

Other Expenses

707

489

44.7

3,667

(80.7)

5,579

2,764

101.9

(% of total income)

9.7

7.4

19.9

13.1

8.2

Total Expenditure

6,158

5,636

9.3

14,087

(56.3)

33,533

27,315

22.8

EBITDA

1,113

965

15.4

4,294

(74.1)

8,963

6,258

43.2

(EBITDA %)

15.3

14.6

23.4

21.1

18.6

Interest

9

4

129.8

31

(71.1)

55

34

63.4

Depreciation

171

127

34.7

138

23.4

544

458

18.8

Other Income

249

163

52.2

163

52.2

642

824

(22.1)

PBT

1,182

998

18.5

4,288

(72.4)

9,006

6,591

36.6

(% of total income)

16.3

15.1

23.3

21.2

19.6

Total Tax

367

330

11.1

1,490

(75.4)

2,994

2,280

31.3

(% of PBT)

31.0

33.1

34.7

33.3

34.6

PAT (Reported)

816

668

22.1

2,798

(70.9)

6,011

4,311

39.4

(% of total income)

11.2

10.1

15.6

14.1

12.8

EPS (`)

16.7

13.6

22.1

57.2

(70.9)

122.8

88.1

39.4

Source: Company, Angel Research

Exhibit 2: Actual vs. Estimates

 

(` cr)

Actual

Estimates

Var. (%)

Revenue

7,272

8,251

(11.9)

EBITDA

1,113

1,196

(7.0)

PAT

816

785

3.9

EPS (`)

16.7

16.0

3.9

Source: Company, Angel Research

Revenue reportedly lower due to logistics hurdles: Having grown admirably in the past few quarters, BHEL was unable to impress the street on this occasion. The company’s low growth can partially be attributed to certain logistics issues. As cited by the management, revenue of ~`600cr was unrecognised due to logistics bottlenecks.

(` cr)

( ` cr) Exhibit 3: Segment–wise performance BHEL | 1QFY2012 Result Update Y/E March ( `

Exhibit 3: Segment–wise performance

BHEL | 1QFY2012 Result Update

Y/E March (` cr)

1QFY12

1QFY11

% chg (yoy)

4QFY11

% chg (qoq)

FY11

FY10

% chg (yoy)

Revenue

Power

5,780

5,373

7.6

15,144

(61.8)

34,791

26,861

29.5

Industry

1,653

1,388

19.1

3,709

(55.4)

9,186

7,879

16.6

Total Revenue

7,433

6,761

9.9

18,853

(60.6)

43,977

34,740

26.6

EBIT

Power

952

1,071

(11.1)

4,136

(77.0)

8,312

6,317

31.6

Industry

373

193

93.2

985

(62.1)

1,915

1,642

16.6

Total EBIT

1,325

1,264

4.9

5,121

(74.1)

10,227

7,959

28.5

Revenue mix (%)

Power

77.8

79.5

80.3

79.1

77.3

Industry

22.2

20.5

19.7

20.9

22.7

EBIT Margin (%)

Power

16.5

19.9

27.3

23.9

23.5

Industry

22.6

13.9

26.6

20.8

20.8

Total

17.8

18.7

27.2

23.3

22.9

Source: Company, Angel Research

Power segment disappoints: For 1QFY2012, the power segment tapered its performance with mere 7.6% yoy growth in revenue to `5,780cr (`5,373cr). In addition, margin contracted by ~340bp yoy to 16.5%. On the other hand, the industrial segment posted strong growth of 19.1%, with a sharp margin expansion of around 870bp on a yoy basis. Better-than-expected profitability can be attributed to the execution of high orders during the quarter.

Weak order inflows: Order intake was dismal during the quarter, totaling `2,471cr, which was down by 77% on a yoy basis and the lowest in the past several quarters. Order intake was dominated by the industry segment – `2,190cr (88%) worth of orders were booked in this segment. Management cited lack of advance payments as one of the reason for not booking orders (~2,000MW of orders were on hold awaiting payment advance).

Exhibit 4: Order inflows

Exhibit 5: Order backlog

25,000

20,000

15,000

10,000

5,000

-

1QFY09 14,500 2QFY09 14,350 3QFY09 15,107 4QFY09 15,580 1QFY10 12,400 2QFY10 8,000 3QFY10 16,000 4QFY10
1QFY09
14,500
2QFY09
14,350
3QFY09
15,107
4QFY09
15,580
1QFY10
12,400
2QFY10
8,000
3QFY10
16,000
4QFY10
22,614
1QFY11
10,824
2QFY11
13,506
3QFY11
12,592
4QFY11
23,554
1QFY12
2,471
(` cr)

150,000

120,000

90,000

60,000

30,000

-

1QFY09 95,000 2QFY09 104,000 3QFY09 113,584 4QFY09 117,000 1QFY10 124,400 2QFY10 125,800 3QFY10 134,000
1QFY09
95,000
2QFY09
104,000
3QFY09
113,584
4QFY09
117,000
1QFY10
124,400
2QFY10
125,800
3QFY10
134,000
4QFY10
143,800
1QFY11
148,000
2QFY11
153,737
3QFY11
157,611
4QFY11
164,100
1QFY12
159,639

Source: Company, Angel Research

Source: Company, Angel Research

BHEL | 1QFY2012 Result Update Key highlights of the conference call Capex for FY2012E is

BHEL | 1QFY2012 Result Update

Key highlights of the conference call

Capex for FY2012E is estimated at `1,200cr.

The power sector has been marred with delay on order finalisations mainly due to issues related to coal linkages and land acquisitions.

About 9,000MW of orders are in the advanced stages and awaiting coal linkages. The challenges seem to be temporary and are expected to dissipate in the due course.

Order pipeline includes NTPC bulk tenders, Rajasthan SEBs (Suratgarh TPS and Chhabra TPS) and DB power, among others.

NTPC JV for BOP – the company has partnered with UCC of USA for ash handling plant. Likewise, the company has also tied up for a coal handling plant.

Capacity expansion from 15GW to 20GW is on track.

NTPC bulk tender – Court dealings over the NTPC – Ansaldo Gammon case are in the process. The bulk tendering is expected to finalise by the end of

3QFY2012.

BHEL | 1QFY2012 Result Update Investment concerns Macro concerns loom large : With the Indian

BHEL | 1QFY2012 Result Update

Investment concerns

Macro concerns loom large: With the Indian coal sector struggling to meet the demands of the power sector, the perceived shortage in coal supply casts a grim outlook on the power sector. BHEL turns vulnerable to this scenario – non-recipient of coal will delay the current power projects (BHEL’s customers), thereby hurdling BHEL’s execution capabilities. Further, elevated interest rates remain a cause of concern, given the cascading impact on greenfield/incremental capex in power projects and, thereby, lower demand for power generation equipment. Overall, the current macro climate does not seem to augur well for the company.

BTG space – Domestic competition crawling in: While BHEL has enjoyed a leading position in the power equipment space, the segment has marked the entry of many players offering BTG packages with supercritical parameters by entering into JVs with leading foreign players. (With this, the installed capacity for BTG is estimated at 36GW by the end of 2013). Intensifying competition is likely to fork out BHEL’s dominant market share.

Alternate avenues will not fully complement the power segment: While the company intends to scale up in other avenues such as transmission equipment and locomotives, this will do little to complement the power segment’s run in the medium-to-long term. BHEL’s performance is largely skewed toward generation equipment and auxiliaries and a longer horizon needs to be envisaged in order to churn returns from any other avenue.

Outlook and valuation: While BHEL rides high on a strong order book, the execution process may witness structural delays (delayed takeoffs) on the back of challenges outlined in the power sector. In addition, coal supply concerns weigh heavily on new power projects, which will cascade to lower equipment demand, thereby impacting the order inflow. Further, given the intensifying competition from domestic as well as overseas players, we believe it will be difficult for BHEL to maintain its existing profitability margins and current market share in the long term. The attractive valuations of 13.7x FY2012E EPS and at 12x FY2013E EPS are largely overshadowed on account of the aforementioned woes. Likewise, the FPO element will remain an overhang in the near term, thereby providing a limited upside. Given the long-term structural concerns, we remain Neutral on the stock.

Exhibit 6: Revised estimates

 

FY2012E

FY2013E

(` cr)

Earlier estimates

Revised estimates

Var. (%)

Earlier estimates

Revised estimates

Var. (%)

Revenue

50,647

49,743

(1.8)

59,389

57,080

(3.9)

EBITDA

10,030

9,790

(2.4)

11,768

11,356

(3.5)

PAT

6,541

6,678

2.1

7,660

7,736

1.0

Source: Company, Angel Research

Exhibit 7: Key assumptions BHEL | 1QFY2012 Result Update Particulars (%) FY12E FY13E Order Inflow

Exhibit 7: Key assumptions

BHEL | 1QFY2012 Result Update

Particulars (%)

FY12E

FY13E

Order Inflow Growth - Power

2.0

5.0

Order Inflow Growth - Industry

8.0

15.0

Order Inflow Growth - Exports

8.0

10.0

Order Inflow Growth - Combined

3.5

7.3

Order Backlog Growth - Combined

7.8

5.6

Source: Company, Angel Research

Exhibit 8: Angel EPS forecast

Y/E March

Angel forecast

Bloomberg consensus

Var (%)

FY2012E

136.4

136.5

(0.1)

FY2013E

158.0

153.1

3.2

Source: Company, Angel Research

Exhibit 9: Premium/Discount to Sensex P/E 120 100 80 60 40 20 0 (20) 5-yr
Exhibit 9: Premium/Discount to Sensex P/E
120
100
80
60
40
20
0
(20)
5-yr Average Premium
Absolute Premium
(%)
Jul-06
Nov-06
Mar-07
Jul-07
Nov-07
Mar-08
Jul-08
Nov-08
Mar-09
Jul-09
Nov-09
Mar-10
Jul-10
Nov-10
Mar-11
Jul-11

Source: Company, Angel Research

Exhibit 11: Peer valuation

Exhibit 10: One year forward P/E Band 3,500 2,800 2,100 1,400 700 0 Share Price
Exhibit 10: One year forward P/E Band
3,500
2,800
2,100
1,400
700
0
Share Price (`)
10x
15x
20x
25x
(`)
Jul-05
Nov-05
Mar-06
Jul-06
Nov-06
Mar-07
Jul-07
Nov-07
Mar-08
Jul-08
Nov-08
Mar-09
Jul-09
Nov-09
Mar-10
Jul-10
Nov-10
Mar-11
Jul-11

Source: Company, Angel Research

Company

Reco.

CMP

Tgt. price

Upside/

P/BV(x)

P/E(x)

FY2011-13E

RoCE (%)

RoE (%)

 

(`)

(`) (Downside) (%) FY12E FY13E FY12E FY13E

EPS CAGR FY12E FY13E FY12E

FY13E

ABB*

Sell

866

637

(26.5)

6.6

5.8

42.7

36.8

180.2

23.9

24.7

16.6

16.8

Areva T&D*

Neutral

251

-

-

5.2

4.3

28.2

21.2

23.3

24.0

26.9

19.7

22.1

BHEL

Neutral

1,825

-

-

3.6

3.0

13.4

11.5

19.5

40.0

37.3

29.4

27.3

BGR Energy

Buy

434

500

15.2

2.6

2.2

9.8

9.0

3.7

19.5

18.7

30.0

26.8

Crompton Greav.

Neutral

176

183

3.8

3.0

2.5

17.9

11.5

2.8

19.6

26.7

18.1

23.7

Jyoti Structures

Buy

89

104

16.9

1.0

0.8

7.0

5.8

18.8

23.9

23.9

16.8

15.3

KEC International

Buy

80

115

44.2

1.8

1.4

8.4

6.2

24.1

24.9

28.7

23.9

26.3

Thermax

Neutral

587

-

-

4.3

3.5

16.8

14.3

13.1

33.6

32.7

28.3

26.7

Source: Company, Angel Research.*December year end.

Profit & Loss statement BHEL | 1QFY2012 Result Update Y/E March ( ` cr) FY2008

Profit & Loss statement

BHEL | 1QFY2012 Result Update

Y/E March (` cr)

FY2008 FY2009 FY2010

FY2011 FY2012E

FY2013E

Net Sales

19,305

26,212

32,861

41,579

48,768

55,961

Other operating income

422

514

493

917

975

1,119

Total operating income

19,727

26,727

33,355

42,496

49,743

57,080

%

chg

12.0

35.5

24.8

27.4

17.1

14.8

Net Raw Materials

10,662

16,030

19,428

22,543

27,821

31,925

Other Mfg costs

2,754

3,555

1,678

5,579

6,096

7,275

Personnel

2,608

2,984

6,449

5,410

6,036

6,524

Other

-

-

-

-

-

-

Total Expenditure

16,024

22,569

27,556

33,533

39,953 45,724.3

EBITDA

3,703

4,158

5,799

8,963

9,790

11,356

%

chg

3.5

12.3

39.5

54.6

9.2

16.0

(% of Net Sales)

18.8

15.6

17.4

21.1

19.7

19.9

Depreciation& Amortisation

297

334

458

544

642

740

EBIT

3,406

3,824

5,341

8,419

9,148

10,616

%

chg

3.1

12.3

39.7

57.6

8.7

16.0

(% of Net Sales)

17.6

14.6

16.3

20.2

18.8

19.0

Interest & other Charges

35

31

34

55

55

55

Other Income

1,023

983

1,155

642

800

900

(% of PBT)

23.3

20.6

17.9

7.1

8.1

7.9

Others

-

-

-

-

-

-

Recurring PBT

4,393

4,776

6,463

9,006

9,893

11,461

%

chg

18.5

8.7

35.3

39.4

9.9

15.8

Extraordinary Expense/(Inc.)

(37.4)

(73.1)

(128.1)

-

-

-

PBT (reported)

4,430

4,849

6,591

9,006

9,893

11,461

Tax

1,571

1,711

2,280

2,994

3,215

3,725

(% of PBT)

35.5

35.3

34.6

33.3

32.5

32.5

PAT (reported)

2,859

3,138

4,311

6,011

6,678

7,736

Add: Share of earnings of asso.

-

-

-

-

-

-

Less: Minority interest (MI)

-

-

-

-

-

-

Prior period items

-

-

-

-

-

-

PAT after MI (reported)

2,859

3,138

4,311

6,011

6,678

7,736

ADJ. PAT

2,860

3,126

4,311

5,413

6,678

7,736

%

chg

18.5

9.3

37.9

25.6

23.4

15.8

(% of Net Sales)

14.5

11.7

12.9

12.7

13.4

13.6

Basic EPS (`)

58.4

63.9

88.1

110.6

136.4

158.0

Fully Diluted EPS (`)

58.4

63.9

88.1

110.6

136.4

158.0

%

chg

18.5

9.3

37.9

25.6

23.4

15.8

Balance Sheet BHEL | 1QFY2012 Result Update Y/E March ( ` cr) FY2008 FY2009 FY2010

Balance Sheet

BHEL | 1QFY2012 Result Update

Y/E March (` cr)

FY2008

FY2009

FY2010

FY2011 FY2012E FY2013E

SOURCES OF FUNDS

Equity Share Capital

490

490

490

490

490

490

Preference Capital

-

-

-

-

-

-

Reserves& Surplus

10,285

12,449

15,428

19,664

24,796

30,814

Shareholder’s Funds

10,774

12,939

15,917

20,154

25,285

31,304

Minority Interest

-

-

-

-

-

-

Total Loans

95

149

128

163

163

163

Deferred Tax Liability

(1,338)

(1,840)

(1,527)

(2,164)

(2,164)

(2,164)

Total Liabilities

9,531

11,248

14,518

18,154

23,285

29,303

APPLICATION OF FUNDS

Gross Block

4,443

5,225

6,580

8,050

9,294

10,710

Less: Acc. Depreciation

3,462

3,754

4,165

4,649

5,357

6,097

Net Block

981

1,470

2,415

3,401

3,937

4,613

Capital Work-in-Progress

658

1,157

1,530

1,762

1,718

1,802

Goodwill

-

-

-

-

-

-

Investments

8

52

80

439

439

439

Current Assets

27,906

36,901

42,935

51,495

57,751

69,502

Cash

8,386

10,315

9,790

9,630

11,301

14,335

Loans & Advances

1,388

2,424

2,814

3,237

3,901

4,477

Other

421

350

407

310

433

509

Current liabilities

20,022

28,333

32,442

38,943

40,560

47,052

Net Current Assets

7,884

8,568

10,493

12,551

17,191

22,450

Mis. Exp. not written off

-

-

-

-

-

-

Total Assets

9,531

11,248

14,518

18,154

23,285

29,303

Cash Flow statement BHEL | 1QFY2012 Result Update Y/E March ( ` cr) FY2008 FY2009

Cash Flow statement

BHEL | 1QFY2012 Result Update

Y/E March (` cr)

FY2008

FY2009

FY2010

FY2011 FY2012E FY2013E

Profit before tax

4,430

4,849

6,591

9,006

9,893

11,461

Depreciation

297

334

458

544

642

740

(Inc)/Dec in Working Capital

1,336

1,244

(2,450)

(2,218)

(2,969)

(2,224)

Less: Other income

1,023

983

1,155

642

800

900

Direct taxes paid

1,974

2,213

1,967

3,076

3,215

3,725

Others

30

(18)

(27)

(14)

-

-

Cash Flow from Operations

3,097

3,214

1,450

3,600

3,550

5,352

(Inc.)/Dec.in Fixed Assets

(664)

(1,280)

(1,728)

(1,702)

(1,200)

(1,500)

(Inc.)/Dec. in Investments

-

(44)

(28)

(359)

-

-

Other income

1,023

983

1,155

642

800

900

Cash Flow from Investing

359

(341)

(600)

(1,420)

(400)

(600)

Issue of Equity

-

-

-

-

-

-

Inc./(Dec.) in loans

6

54

(22)

36

-

-

Dividend Paid (Incl. Tax)

873

974

1,332

1,784

1,546

1,718

Others

(11)

(24)

(21)

(591)

66

-

Cash Flow from Financing

(868)

(919)

(1,354)

(1,748)

(1,546)

(1,718)

Inc./(Dec.) in Cash

2,577

1,929

(525)

(160)

1,671

3,034

Opening Cash balances

5,809

8,386

10,315

9,790

9,630

11,301

Closing Cash balances

8,386

10,315

9,790

9,630

11,301

14,335

Key ratios BHEL | 1QFY2012 Result Update Y/E March FY2008 FY2009 FY2010 FY2011 FY2012E FY2013E

Key ratios

BHEL | 1QFY2012 Result Update

Y/E March

FY2008 FY2009 FY2010

FY2011 FY2012E

FY2013E

Valuation Ratio (x)

P/E (on FDEPS)

31.2

28.6

20.7

16.5

13.4

11.5

P/CEPS

28.3

25.8

18.7

15.0

12.2

10.5

P/BV

8.3

6.9

5.6

4.5

3.6

3.0

Dividend yield (%)

0.8

0.9

1.3

1.4

1.5

1.6

EV/Sales

4.2

3.0

2.4

1.9

1.6

1.3

EV/EBITDA

21.9

19.0

13.7

8.9

7.9

6.6

EV/Total Assets

7.5

6.0

5.0

3.9

3.1

2.4

Per Share Data (`)

EPS (Basic)

58.4

63.9

88.1

110.6

136.4

158.0

EPS (fully diluted)

58.4

63.9

88.1

110.6

136.4

158.0

Cash EPS

64.5

70.7

97.4

121.7

149.5

173.2

DPS

15.3

17.0

23.3

25.0

27.0

30.0

Book Value

220.1

264.3

325.1

405.3

503.7

607.6

DuPont Analysis

EBIT margin (%)

17.6

14.6

16.3

20.2

18.8

19.0

Tax retention ratio

0.6

0.6

0.7

0.7

0.7

0.7

Asset turnover (x)

7.0

10.1

7.4

5.1

4.1

3.7

ROIC (Post-tax) (%)

79.4

95.2

78.5

68.4

51.6

47.1

Cost of Debt (Post Tax) (%)

24.8

16.3

15.8

25.1

22.6

22.6

Leverage (x)

(0.8)

(0.8)

(0.6)

(0.5)

(0.5)

(0.5)

Operating RoE (%)

37.3

32.9

40.1

47.1

38.3

35.7

Returns (%)

RoCE (Pre-tax)

34.5

31.9

36.7

46.3

40.0

37.3

Angel RoIC (Pre-tax)

148.9

226.2

172.0

128.2

89.3

79.0

RoE

29.2

26.4

29.9

30.0

29.4

27.3

Turnover ratios (x)

Asset Turnover (Gross Block)

4.5

5.4

5.6

5.7

5.6

5.6

Inventory / Sales (days)

94

95

95

89

90

90

Receivables (days)

204

195

204

211

211

211

Payables (days)

255

265

272

249

232

226

WC (ex-cash) (days)

3

(15)

(6)

16

32

45

Solvency ratios (x)

Net debt to equity

(0.8)

(0.8)

(0.6)

(0.5)

(0.5)

(0.5)

Net debt to EBITDA

(2.2)

(2.5)

(1.7)

(1.1)

(1.2)

(1.3)

Int cov. (EBIT / Interest)

96.2

124.5

159.4

153.8

167.1

194.0

Research Team Tel: 022 – 3935 7600 DISCLAIMER E-mail: research@angelbroking.com BHEL | 1QFY2012 Result Update

Research Team Tel: 022 – 3935 7600

DISCLAIMER

E-mail: research@angelbroking.com

BHEL | 1QFY2012 Result Update

Website: www.angelbroking.com

This document is solely for the personal information of the recipient, and must not be singularly used as the basis of any investment decision. Nothing in this document should be construed as investment or financial advice. Each recipient of this document should make such investigations as they deem necessary to arrive at an independent evaluation of an investment in the securities of the companies referred to in this document (including the merits and risks involved), and should consult their own advisors to determine the merits and risks of such an investment.

Angel Broking Limited, its affiliates, directors, its proprietary trading and investment businesses may, from time to time, make investment decisions that are inconsistent with or contradictory to the recommendations expressed herein. The views contained in this document are those of the analyst, and the company may or may not subscribe to all the views expressed within.

Reports based on technical and derivative analysis center on studying charts of a stock's price movement, outstanding positions and trading volume, as opposed to focusing on a company's fundamentals and, as such, may not match with a report on a company's fundamentals.

The information in this document has been printed on the basis of publicly available information, internal data and other reliable sources believed to be true, but we do not represent that it is accurate or complete and it should not be relied on as such, as this document is for general guidance only. Angel Broking Limited or any of its affiliates/ group companies shall not be in any way responsible for any loss or damage that may arise to any person from any inadvertent error in the information contained in this report. Angel Broking Limited has not independently verified all the information contained within this document. Accordingly, we cannot testify, nor make any representation or warranty, express or implied, to the accuracy, contents or data contained within this document. While Angel Broking Limited endeavours to update on a reasonable basis the information discussed in this material, there may be regulatory, compliance, or other reasons that prevent us from doing so. This document is being supplied to you solely for your information, and its contents, information or data may not be reproduced, redistributed or passed on, directly or indirectly.

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Neither Angel Broking Limited, nor its directors, employees or affiliates shall be liable for any loss or damage that may arise from or in connection with the use of this information.

Note: Please refer to the important `Stock Holding Disclosure' report on the Angel website (Research Section). Also, please refer to the latest update on respective stocks for the disclosure status in respect of those stocks. Angel Broking Limited and its affiliates may have investment positions in the stocks recommended in this report.

Disclosure of Interest Statement

BHEL

1. Analyst ownership of the stock

No

2. Angel and its Group companies ownership of the stock

No

3. Angel and its Group companies' Directors ownership of the stock

No

4. Broking relationship with company covered

No

Note: We have not considered any Exposure below ` 1 lakh for Angel, its Group companies and Directors.

Ratings (Returns):

Buy (> 15%) Reduce (-5% to 15%)

Accumulate (5% to 15%) Sell (< -15%)

Neutral (-5 to 5%)