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Bharat Heavy Electricals limited (BHEL) - Research Report

Bharat Heavy Electricals limited (BHEL) - Research Report

 

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BHEL is an A /T+1 group Heavy Electrical Equipment industry company with having Face value of Rs. 2. Bharat Heavy Electricals Ltd is an integrated power plant equipment manufacturer owned by Govt. of India which is engaged in design, engineering, manufacture, erection, testing, commissioning and servicing of a wide range of products and services for the core sectors of the economy, viz. Power, transmission, Industry, transportation, renewable energy, Oil & Gas and defence. The company has references in over 84 countries with execution of 24 overseas projects spread over 16 countries for around 7000 MW and 17000MW overseas projects already contracted. Company has an installed base of 190+ GW Power Plant Equipment Globally with almost 57% share in India’s Coal Based power generation. It has 40+ years of EPC experience in Power transmission and already supplied 640000+ MVA transmission equipment. BHEL is India’s largest manufacturer of AC machines with over 32000+ machines supplied and most of the process industries of India are equipped with its Centrifugal compressors.  BHEL is also the largest supplier of propulsion equipment and controls to Indian Railways and over 30% of IGBT based locomotives are equipped with propulsion equipment supplied by BHEL. Its Power sector business contributes 76% of total revenue. Its industry sector business contributes to 24% of the revenue which includes transportation, renewables, defence & aerospace, energy storage solutions & other business areas, captive power & process plants, transmission and industrial products.

 

 

Fundamentals (FY22-23):

CMP

Rs. 100.45

52 - week high

Rs. 107.85

52 – week low

Rs. 51.40

Dividend % (consolidated)

0.39 %

ROCE

                       2.62 %

BVPS (Rs.)

                                  77.05

Sales (Rs.)

23364 cr.

Debt to Equity

                                    0.2

P/E ratio

51.13

EPS (consolidated)

1.37

P/B ratio

0.91

Market Cap

35,830 Cr.

Face value

Rs. 2

 

  

 

Financial Results:

Company’s Net Sales was Rs 8,226.99 crore in March 2023 up 2.05%, Quarterly Net Profit at Rs. 611.00 crore in March 2023 down 33.04% and EBITDA stands at Rs. 1,097.77 crore in March 2023 down 13.69% as compared to March 2022.  

Key Points:

  1. Bharat Heavy Electricals Limited (BHEL) has achieved a major milestone with the successful synchronisation of the 660 MW Unit-2 of the 1,320 MW Maitree Super Thermal Power Project (STPP) in Bangladesh. It is being set up by BHEL for the Bangladesh-India Friendship Power Company (BIFPCL), a 50:50 joint venture between the Bangladesh Power Development Board (BPDB) and NTPC Limited.
  2. Recently the company has signed a Technical Assistance and License Agreement with General Electric Technology GmbH Switzerland for Gas Turbines. BHEL also has been manufacturing and supplying GE-design Gas Turbines to various customers in India and abroad since 1986. Under this extension Agreement, BHEL will gain enhanced rights for existing /uprated and new Gas Turbine models and will also be able to supply Gas Turbines with fuel blends viz. Hydrogen, Methanol, Syngas, etc. and in hybrid configuration contributing towards accelerating the energy transition in India.
  3. BHEL-TWL (BHEL-Titagarh Wagons Ltd.) consortium has been awarded an order for 80 Vande Bharat Trains in one of the biggest Railway tenders for manufacturing-cum-maintenance of Vande Bharat Trains valued at more than Rs.23,000 Crore (excluding taxes and duties).
  4. Nuclear Power Corporation of India Limited (NPCIL) and Bharat Heavy Electricals Limited (BHEL) have entered into an MoU to jointly pursue business opportunities in the area of Nuclear Power Plants based on Pressurized Heavy Water Reactor (PHWR) technology. Under the MoU, BHEL and NPCIL will jointly explore opportunities for development of Nuclear Power Projects with a view to reduce project gestation time.
  5. Bharat Heavy Electricals Limited (BHEL) has won an order for the Renovation & Modernisation (R&M) of steam turbines at Ukai Thermal Power Station (TPS) in Gujarat valued at about Rs.300 Crore.
  6. Bharat Heavy Electricals Limited (BHEL) has entered into strategic MoUs with Coal India Limited (CIL) and NLC India Limited (NLCIL) for setting up Coal Gasification based plants. Significantly, this will be a breakthrough step towards meeting the National Coal Gasification Mission target of 100 million MT.
  7. Company also bagged an order for setting up the 2x660 MW Talcher Thermal Power Project Stage-III on EPC (Engineering, Procurement & Construction) basis from NTPC Ltd. 
  8. Bharat Heavy Electricals Limited (BHEL) has entered into a long-term Technology License Agreement (TLA) with Sumitomo SHI FW, Finland (SFW) for design, engineering, manufacturing, erection, commissioning and sale of subcritical as well as supercritical Circulating Fluidized Bed Combustion (CFBC) Boilers in India and in overseas territories except select countries.
  9. BHEL and Rail Vikas Nigam Ltd. (RVNL) have signed an MoU to jointly work in the field of infrastructure and project execution, in India and abroad, through synergy of their respective capabilities. It will pave the way for collaboration in both the present as well as future areas of operation towards the 'Atmanirbhar Bharat Abhiyan' of the Government of India.
  10. Bharat Heavy Electricals Limited (BHEL) has also successfully commissioned India’s largest floating Solar PV plant rated at 100 MW at NTPC Ramagundam in Telangana.
  11. It has also secured the order for 6,000 HP Electric Locomotives, first ever in the country for industrial application which was placed by NTPC Limited for supply at Lara thermal power project site.
  12. The company also bagged the order for the Package for Baiji Refinery in Iraq, has been placed by Northern Refineries Company (NRC), a National Oil refinery company owned by Ministry of Oil, Republic of Iraq.
  13. BHEL secured orders worth Rs 23,548 Crore (excluding taxes) during 2022-23 in its power, industry and export segments and the company ended the year with a total order book of over Rs 91,336 crore (excluding taxes).
  14. India’s third lunar mission, Chandrayaan3 was equipped with BHEL manufactured Batteries - Power Supply Units for Lander Module (Critical equipment of Lander Module to Moon) & Propulsion Module (Supplying power during launch and manoeuvring).

 

 

In last 3 Years the stock gave a return of 174.37% as compared to the rise of Sensex and Nifty in the same period.

Notably it is a leading manufacturer of power plant equipment (nuclear, hydro, thermal, and renewables) and is the only Indian company to be actively associated with all the three stages of the Indian Nuclear Programme and it has supplied Steam Turbine Generator sets for nearly 50% of the country’s total installed nuclear capacity. Company has long term relations with many reputed organizations of Aerospace and Defence industries like ISRO, HAL, ADA, NAL and GTRE for various programs and the company has been supporting ISRO’s space programs for two decades. Even IAF’s indigenously developed aircraft Tejas is equipped with compact heat exchanges designed and manufactured by BHEL. BHEL has also stepped into EV segment by manufacturing Ev buses as well as EV charging stations. Considering the widespread of product portfolios and services offered by the company, huge order book position and well-grounded roots in Power industry and improving financial positions backed by Govt. of India’s campaign of Make in India and Atmanirbhar Bharat the company is well equipped to generate higher than expected results going further. Investors may invest in this company for long term period.

 

HET ZAVERI​

info@smartinvestment.in

(Disclosures: At the time of writing this article, author, his clients & dependent family members may have positions in the stocks mentioned above. The author, his firm, his clients or any of his dependent family members may make purchases or sale of the securities mentioned in website. Author may have positions in above stocks so have vested interest obviously in their going up or down as the case may be.

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