BHEL slips 3% as JP Morgan cuts target price, full year earnings estimates

BHEL shares declined more than 3 percent intraday Friday after JP Morgan slashed 12-month target price to Rs 128 (from Rs 128 earlier) despite stock's underperformance to Sensex. The research house cut its earnings estimates for FY18 / FY19 to 6 percent / 10 percent as it feels the replacement of old thermal plants is not as big a catalyst as it is made out to be. The state-run power equipment maker has underperformed Sensex by around 25 percent over the last three months. FY17 order inflows/backlog were down 46/5 percent and March quarter topline growth (negative 2.2 percent) disappointed. JP Morgan feels staff costs are likely to increase around 20 percent in FY18 following the wage settlement exercise, solar tariffs appear to have become more cost competitive relative to thermal, the capex opportunity by thermal plays for emissions reduction has seen pushback, and BHEL's diversification efforts have not produced very significant results over the last few years. more at: http://www.moneycontrol.com/news/business/stocks-business/bhel-slips-3-as-jp-morgan-cuts-target-price-full-year-earnings-estimates-2311145.html