BHEL may take 65% hit on earnings, say foreign brokerages

Foreign brokerages have turned the heat on state-owned engineering major Bharat Heavy Electricals Ltd (BHEL) over the coal block allocation scam, dubbed ‘Coalgate’. In their latest reports, Nomura and Macquarie have warned their clients BHEL might be in deep trouble due to a huge potential risk to its order book. Nomura has said 28 per cent of BHEL’s order backlog is at risk of cancellation due to either non-availability of coal linkage or cancellation of existing linkages due to the coal allocation scam. In the worst-scenario analysis, Macquarie said, BHEL’s earnings might decline 65 per cent by 2014-15 from the 2011-12 level, while its stock price could more than halve from the current level. Domestic brokerage Antique has also highlighted the downside risk on BHEL’s earnings and return on equity. BHEL’s stock, however, wasn’t impacted by the spate of negative reports on Friday, as the domestic markets rallied, tracking global peers, after the European Central Bank’s bond-buying commitment. ref: http://business-standard.com/india/news/bhel-may-take-65-hitearnings-say-foreign-brokerages/485761/