Shares of Bharat Heavy Electricals (BHEL) plunged almost 18 percent on Monday after the company reported its March quarter earnings.
The state-run company reported a consolidated net loss of Rs 1,036.32 crore in the fourth quarter of fiscal 2021 as against a net loss of Rs 1,532.18 crore in the year-ago period.
Total income during January-March 2021 rose to Rs 7,245.16 crore, from Rs 5,166.64 crore in the year-ago period.
Brokerages maintained a sell rating on the stock due to the company’s weak execution. “The Q4 was weak with its execution. It cleaned up its balance sheet with Rs 1,800 crore in provisions, whether this is a precursor to divestment remains to be seen,” CLSA said.
The brokerage house cut the FY22 EPS estimate by seven percent to factor in weak discom financials. It maintained a sell rating with a target price of Rs 40 per share.
Goldman Sachs maintained a sell call with a target price of Rs 23 per share.
“The company delivered a disappointing quarter. The reported losses were significant at Rs 1,000 crore, even adjusting for one-time provisions, PAT would have been at Rs 400 crore. We expect even FY22 to generate no profit and the company does not warrant the current high multiple,” Goldman Sachs said.
Kotak Institutional Equities said that BHEL reported weak results on execution, gross margin and working capital. The weak gross margin casts doubts on its ability to report topline high enough to cover fixed costs, it added.
The brokerage maintained a sell rating with a target price of Rs 34 per share.
At 2:00 pm, the shares of BHEL were trading 10.83 percent lower at Rs 67.95 apiece on the BSE.