Bharat Heavy Electricals Ltd

- As of August 2019, there is no plan for new equity fundraising or buyback (Subodh Gupta confirmed no discussions on larger dividend payout or buyback). - The company has increased debt to fund working capital needs despite a cash balance; net cash after borrowings was around ₹5,046 crores as of March 2019. - Borrowings increased by ₹1,500 crores in Q1 FY20, raising total debt to ₹4,000 crores by June 30, 2019, primarily due to stringent payment terms and working capital pressures. - The company is leveraging market borrowing to address liquidity constraints but did not indicate any fresh fundraising through equity or additional significant debt beyond current levels at that time.

- BHEL has established a facility at Bangalore for manufacturing space-grade lithium-ion cells based on ISRO technology. This backward integration aims to meet indigenous lithium-ion cell requirements for ISRO satellites and large vehicles as well as potential defense applications (Page 3). - Discussions indicate exploring partnerships or joint ventures in lithium-ion battery manufacturing, given government policy requirements for tie-ups with entities having at least 1 GW supply experience, as no OEM currently meets that in India (Page 14). - No mention of large-scale new capital expenditure or buybacks/dividend payouts at the moment (Page 17). - Focus on strategic collaborations, e.g., JV with a Japanese partner for high-speed rail and stainless steel coaches for metros, with plans to indigenize 25% local content (Page 16). Overall, BHEL is investing strategically in new technology capabilities (like lithium-ion cells) and joint ventures rather than announcing large standalone capex.

- BHEL expects a new growth cycle in the power sector due to improved electricity demand (7% growth in Q1 FY20 vs 5% in Q1 FY19), better fuel availability, and efforts to improve discoms' financial health. - Coal-based power plant ordering is likely to pick up shortly as coal generation balances renewable intermittency. - The company targets roughly 30 GW potential from emission control (FGD) projects and expects to convert a significant portion of L1 orders into confirmed orders by Q3/Q4 FY20. - New projects in power (e.g., Talcher, Singareni, Lara, Singrauli) and nuclear (around 10 sets of steam generators) provide strong order pipeline visibility. - Electrical projects worth six 700 MW turbine generator sets are expected. - Order inflow in power segment expected around Rs. 50,000 crores if conditions are "realistic." - Execution challenges due to customer clearances and working capital constraints may affect topline growth but improvement is expected in subsequent quarters.

- BHEL expects improvement and aims to return to targeted revenue figures from Q2 FY20 after Q1 execution challenges. - The company is optimistic about crossing Rs. 50,000 crores order inflow in FY20 if all goes realistically (not just optimistic). - Order backlog sizeable with power sector at Rs. 85,789 crores and industry Rs. 11,959 crores as of June 30, 2019. - Working on clearing bottlenecks like project clearances; expects most pending orders (e.g., Sagardighi, Talcher) to be finalized by Q3 or Q4 FY20. - Marginal increase in raw material costs projected; employee costs expected to reduce overall due to manpower rationalization. - Earnings impacted by execution delays and working capital stresses in Q1, but there is focus on improving cash inflows and operational efficiencies. - Management confident of achieving or exceeding full-year MOU revenue guidance of Rs. 31,000-32,000 crores. - Interest costs rising due to increased borrowing, but efforts to optimize manpower and cost control ongoing.

- 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: ₹1,913 crores; Industry: ₹1,976 crores) - Pending key orders and pipelines: - Sagardighi 1x800 MW and Talcher clearance expected by Q3 FY20 - Tenders in pipeline: Lara, Singrauli, Talabira, Singareni Collieries Limited - NPCL fleet orders (700 MW) expected during current fiscal year - FGD and emission control orders: 23,000 MW secured; 19 GW in L1 stage; 30 GW potential in pipeline - Railway electrification and regenerative loco orders expected shortly - Orders executable backlog influenced by customer clearances and sequential execution requirements causing delays