Bhel skids on U-turn by NTPC

On Tuesday, shares of state-owned Bharat Heavy Electricals Ltd (Bhel) tumbled 4.6% as investors reacted to news that a sizeable order from NTPC Ltd may be re-tendered. The reaction is not surprising. Bhel has been a victim of the slowdown in the power and industrial sectors. When a large order turns uncertain, it is a big negative for investors, coming on the back of existing woes of low order inflows and weak execution. Macquarie Research pointed out in a report dated 22 August that Bhel’s portion of the NTPC order accounts for about 4% of its order book. It said NTPC is likely to invite fresh bids “for only 4 gigawatt worth of projects in FY2017 with no certainty of bid closure before year-end.” That’s a blow for Bhel. Existing uncertainties are not showing any signs of letting up soon. Plant load factor of the power sector is merely 60-65%, implying that the lull in new power capacity could continue for a few more years, unless industrial activity rebounds. Till then, it will restrict orders for power equipment makers such as Bhel. more at: http://www.livemint.com/Money/ehrWWM3zLygXQvyo0uK6UO/Bhel-skids-on-Uturn-by-NTPC.html