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Established more than 40 years ago to usher in the indigenous heavy electrical equipment industry in India, the company has been earning profit continuously since the year ending March 1972 (FY 1972) and paying dividend since FY 1977. Bhel¶s operations are organised around three business sectors: power, industry including transmission, transportation and renewable energy, and overseas business. The company manufactures over 180 products under 30 major product groups and caters to core sectors of the Indian economy: power generation and transmission, industry, transportation and renewable energy. The wide network of 14 manufacturing divisions, four power sector regional centres, over 100 project sites, eight service centres, 18 regional offices and one subsidiary enables it to serve customers with suitable products, systems and services efficiently and at competitive prices.
Sales of Bhel were higher by 16% to Rs 6601.04 crore in the quarter ended June 2010 over the June 2009 quarter. The revenue segment of the power business spurted 18% to Rs 5399.88 crore and that of industry 11% to Rs 1476.31 crore. Facilitated by a 420 basis-point expansion in OPM (to 14.6%), OP jumped 63% to Rs 965.02 crore. PBIDT growth was limited to 38% to Rs 1128.47 crore as other income was lower by 28% to Rs 163.45 crore. PBT rose 39% to Rs 997.75 crore. Taxation was up 95% to Rs 667.65 crore. PAT, therefore, grew 47% to Rs 667.65 crore. Demand for capital goods is expected to be robust in the near term. With its strong order book and execution capabilities, Bhel will continue to exhibit good growth. One expect Bhel to register EPS of Rs 105 in FY 2011. The share price trades at Rs 2453. P/E works out to 23. Considering the high P/E multiples at which other leading engineering companies are traded, this P/E is reasonable.
What makes Bharat Heavy Electricals (BHEL) an interesting long term bet in spite of its recent somber financial performance? It¶s bulging order book. During the year ended March 31, 2003 BHEL secured the highestever orders worth Rs 11,248 crore from domestic and overseas markets. The current outstanding orders in hand stands at over Rs 15,800 crore. A major breakthrough was achieved with the receipt of a Letter of Intent for setting up a 600 MW Gas-based power station in Libya on turnkey basis, comprising four Gas Turbines (V94.2). Valued at Rs 1128 crore, the order is the single largest overseas order received by any capital goods manufacturing company in India. BETA Analyisis
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(Rs in Crs) Latest Data as on 17-Sep-2010 Latest Equity (Rs in Crs) Latest Reserve (Rs in Crs) Latest Book Value(Unit Curr.) Latest EPS(Unit Curr.) Latest Market Price(Unit Curr.) as on 17/Sep/2010 Latest P/E Ratio 52 Week High(Unit Curr.) 52 Week Low(Unit Curr.) Market Capitalisation (Rs in Crs) Stock Exchange Dividend Yield %
489.52 15,427.84 325.16 92.08 2,444.45 26.55 2,585.00 2,105.00 1,19,660.72 BSE 0.95