BHEL forecast stumbles on reality

When Bharat Heavy Electricals Ltd (BHEL) announced its annual results for 2012-13 on May 23, Chairman B Prasad Rao surprised the audience by claiming fresh order inflows had jumped 43 per cent to Rs 31,528 crore. This came as launches of new power projects were at an all-time low. Rao further built on positive sentiment with expectations of continued orders from the public sector in the near future. Less than three months since, that bubble of positivity and assured growth has burst. Fresh orders dipped 80 per cent to Rs 1,500 crore in the first quarter ended June. Net profit fell 50 per cent to Rs 465 crore and net sales declined 24 per cent to Rs 6,352 crore. Accordingly, the share price tumbled 24 per cent within two days, to close at Rs 120.9 on Monday. The government also shelved an earlier plan to offload five per cent stake in the company, owing to the low market valuation and bad order book position. Ref: http://www.business-standard.com/article/companies/how-the-bubble-of-bhel-s-growth-was-burst-113080600515_1.html