Bhel’s turnaround in order flows may be a flash in the pan

After dismal order flows of less than Rs2,000 crore each in the first two quarters of the current fiscal year, the country’s largest public sector power equipment maker Bharat Heavy Electricals Ltd (Bhel), sprung a pleasant surprise with order flows of about Rs12,000 crore in the December quarter. Even better, it matched analysts’ revenue and profit expectations. Although the stock rose by 1.6% on Thursday on favourable news and a positive mood on the Street, it may be too early to rejoice. After all order flows are lumpy in this sector and the third quarter accretion maybe a flash in the pan. On a cumulative basis, the nine-month order flow of Rs15,750 crore in fiscal year 2018 (FY18) is sharply lower when compared to the year-ago period. Therefore, Bhel would have to ramp-up orders in the fourth quarter to be able to sustain order flow growth and keep the order book at the current level of Rs1.02 trillion. All this fuss about order flows is justified given that the company has steadily seen revenue falling (see chart) due to poor orders coming in from the power sector, which accounts for about 80% of its revenue. Moreover, a year back, a significant portion of the company’s order book was slow-moving. more at: http://www.livemint.com/Money/Tr3LxlyHDPBY9ubhIW9LdK/Bhels-turnaround-in-order-flows-may-be-a-flash-in-the-pan.html