Any current/future new fundraising through debt or equity?

As of March 2019, BHEL had a cash balance of around 7500 crores, but net of borrowing, the cash was closer to 5046 crores. The company increased borrowing by about 1500 crores in Q1 FY20, with total borrowing reaching 4000 crores by June 30, 2019. The increased debt is primarily to fund working capital due to stringent payment terms and cash flow pressures. There is no current or planned equity fundraising or discussions with the government about larger dividend payouts or buybacks. The focus is on leveraging existing markets through debt for working capital rather than raising equity capital

Any current/future capex/capital investment/strategic investment?

No explicit mention of any ongoing or planned capital expenditure (capex) or strategic investments was stated during the call. There was no indication of additional investment towards dividend payout or buyback plans at present (Subodh Gupta on increasing debt despite cash position and dividend/buyback discussions). BHEL is engaging in collaborations and JV, notably: - JV with Japanese partner Kawasaki Heavy Industries (KHI) for high-speed rail and stainless steel metro coaches, expected tender participation within the current year. - An MOU with NTPC to form a JV for an advanced ultra-sup

Future growth expectations in sales/revenue/volumes?

BHEL anticipates a new growth cycle in the power sector due to improving demand, fuel availability, and better financial health of discoms (Page 2). The government’s increased CAPEX for railways, defence, renewables, and urban infrastructure is expected to boost BHEL's non-power business (Page 2). Power sector order inflow potential estimated around 30 gigawatts in the current fiscal year, with 25 GW already with BHEL and about 19 GW in L1 stage (Pages 8, 14, 15). Expecting finalization of 8-10 GW out of 16 GW potential power projects during the year, including significant projects like Talche

Future growth expectations in earnings/operating earnings/profits/EPS?

BHEL expects a new growth cycle in the power sector driven by improving demand, fuel availability, and better financial health of discoms (Page 2). Gross revenues for FY20 are targeted in the range of Rs. 31,000 to 32,000 crores, considered achievable or better (Page 13). Optimism on crossing Rs. 50,000 crores order inflow if current trends hold (Page 12). Profitability and EBITDA from emission control and FGD orders expected to be positive but exact figures not forecasted yet (Page 8). Employee costs are expected to decrease slightly, supporting bottom-line improvements (Page 9). Challenges i

Current/ Expected Orderbook/ Pending Orders?

Total order book as of June 30, 2019: ₹1,07,806 crores. - Power sector: ₹85,789 crores. - Industry sector: ₹11,959 crores. - Exports: ₹10,058 crores. Q1 FY20 Order Inflow: ₹3,892 crores. - Power segment: ₹1,913 crores. - Industry segment: ₹1,976 crores. Pending/L1 Orders and Pipeline: - Orders at L1 stage include projects such as Lara, Singrauli, Talabira, and Singareni Collieries. - Expected clearances for Sagardighi 1x800 MW and Talcher projects, likely by Q3 FY20. - Additional large projects in the pipeline (Lara, Singrauli, Talabira, NPCL). - Combined market potential i

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Bharat Heavy Electricals LtdQ2 FY20Electrical Equipment

Bharat Heavy Electricals Ltd Q2 FY20 Earnings Call Analysis

Revenue, margin, capex, fundraise and order book outlook from management commentary.

Price: ₹422P/E: 86.7Market Cap: ₹1.4L CrSector: Electrical Equipment

Management growth scorecard

Revenue

N/A

Margin

N/A

Fundraise

N/A

Order

N/A

Capex

N/A

0 of 0 growth signals are positive — mixed outlook.

Full analysis

Revenue guidance

→BHEL anticipates a new growth cycle in the power sector due to improving demand, fuel availability, and better financial health of discoms (Page 2).
→The government’s increased CAPEX for railways, defence, renewables, and urban infrastructure is expected to boost BHEL's non-power business (Page 2).
→Power sector order inflow potential estimated around 30 gigawatts in the current fiscal year, with 25 GW already with BHEL and about 19 GW in L1 stage (Pages 8, 14, 15).
→Expecting finalization of 8-10 GW out of 16 GW potential power projects during the year, including significant projects like Talcher, Singareni, Kurja, Lara, and others (Page 14).
→Possible order book crossing ₹50,000 crore if optimistic (realistic) assumptions hold (Page 12).
→Execution expected to improve from Q2 onwards, correcting prior delays caused by customer clearance issues (Pages 4, 12).
→Employee cost is expected to reduce over the year, supporting operational efficiency (Page 9).

Margin guidance

→BHEL expects a new growth cycle in the power sector driven by improving demand, fuel availability, and better financial health of discoms (Page 2).
→Gross revenues for FY20 are targeted in the range of Rs. 31,000 to 32,000 crores, considered achievable or better (Page 13).
→Optimism on crossing Rs. 50,000 crores order inflow if current trends hold (Page 12).
→Profitability and EBITDA from emission control and FGD orders expected to be positive but exact figures not forecasted yet (Page 8).
→Employee costs are expected to decrease slightly, supporting bottom-line improvements (Page 9).
→Challenges in execution due to clearances and working capital pressures exist but are viewed as temporary; improvement anticipated in subsequent quarters (Pages 4, 11).
→Order inflow and execution normalization expected to support growth in revenues and profits going forward (Page 4).

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Fundraise plans

→As of March 2019, BHEL had a cash balance of around 7500 crores, but net of borrowing, the cash was closer to 5046 crores.
→The company increased borrowing by about 1500 crores in Q1 FY20, with total borrowing reaching 4000 crores by June 30, 2019.
→The increased debt is primarily to fund working capital due to stringent payment terms and cash flow pressures.
→There is no current or planned equity fundraising or discussions with the government about larger dividend payouts or buybacks.
→The focus is on leveraging existing markets through debt for working capital rather than raising equity capital at present.

Order book

→Total order book as of June 30, 2019: ₹1,07,806 crores.
→ - Power sector: ₹85,789 crores.
→ - Industry sector: ₹11,959 crores.
→ - Exports: ₹10,058 crores.
→Q1 FY20 Order Inflow: ₹3,892 crores.
→ - Power segment: ₹1,913 crores.
→ - Industry segment: ₹1,976 crores.
→Pending/L1 Orders and Pipeline:
→ - Orders at L1 stage include projects such as Lara, Singrauli, Talabira, and Singareni Collieries.
→ - Expected clearances for Sagardighi 1x800 MW and Talcher projects, likely by Q3 FY20.
→ - Additional large projects in the pipeline (Lara, Singrauli, Talabira, NPCL).
→ - Combined market potential in FGD and emission control: ~40 GW (25 GW secured, 19 GW at L1).
→ - About ₹50,000+ crores potential order inflow expected realistically if projects clear timely.

Capex plans

→No explicit mention of any ongoing or planned capital expenditure (capex) or strategic investments was stated during the call.
→There was no indication of additional investment towards dividend payout or buyback plans at present (Subodh Gupta on increasing debt despite cash position and dividend/buyback discussions).
→BHEL is engaging in collaborations and JV, notably:
→ - JV with Japanese partner Kawasaki Heavy Industries (KHI) for high-speed rail and stainless steel metro coaches, expected tender participation within the current year.
→ - An MOU with NTPC to form a JV for an advanced ultra-supercritical (AUSC) 1x800 MW demonstration plant at NTPC Sipat.
→BHEL has set up a new manufacturing facility in Bangalore for space-grade lithium-ion cells based on ISRO technology, supporting backward integration for space and defense applications.
→No direct details on conventional capex outlays or large-scale strategic investments beyond these collaborative ventures were provided.

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