Bharat Heavy Electricals Limited (BHEL) is trading lower by nearly 4% at Rs 135 in otherwise firm market after reporting a disappointing set of numbers for the second quarter ended September 30, 2013 (Q2).
The stock has opened at Rs 138 and hit a low of Rs 133 on BSE. The benchmark S&P BSE Sensex was up 1.02% or 213 points at 1330 hours.
BHEL has reported a sharp 64% year-on-year (yoy) decline in net profit at Rs 456 crore due to 15% fall in net sales at Rs 8,819 crore on yoy basis. The Q2 numbers not strictly comparable due to merger of HPVP with the company.
EBITDA margins contracted 1360 bps to 4.7% largely due to a combination of lower gross margins, under absorption of overhead costs and sharp increase in other expenditure.
“A depleting order book combined with a couple of slow moving projects is taking a toll on the company's margins as overheads remain under-absorbed. Rising debtors and lower client advances is leading to pressure on working capital and hence thereof on cash flow from operations,” says analyst at Kotak Securities in a report.
Meanwhile, the analyst has lowered target price of stock to Rs 147 from its earlier target of Rs 155.
The stock has opened at Rs 138 and hit a low of Rs 133 on BSE. The benchmark S&P BSE Sensex was up 1.02% or 213 points at 1330 hours.
BHEL has reported a sharp 64% year-on-year (yoy) decline in net profit at Rs 456 crore due to 15% fall in net sales at Rs 8,819 crore on yoy basis. The Q2 numbers not strictly comparable due to merger of HPVP with the company.
EBITDA margins contracted 1360 bps to 4.7% largely due to a combination of lower gross margins, under absorption of overhead costs and sharp increase in other expenditure.
“A depleting order book combined with a couple of slow moving projects is taking a toll on the company's margins as overheads remain under-absorbed. Rising debtors and lower client advances is leading to pressure on working capital and hence thereof on cash flow from operations,” says analyst at Kotak Securities in a report.
Meanwhile, the analyst has lowered target price of stock to Rs 147 from its earlier target of Rs 155.