As BHEL’s Q1 performance trips, power outage may be prolonged

As markets opened on Tuesday after a long weekend, Bharat Heavy Electricals Ltd (BHEL) shares tumbled 10%, hitting a new 52-week low of ₹51. Investor dismay is not surprising given the company’s deplorable performance in the June quarter.

The power equipment manufacturer reported an operating loss of ₹266 crore in April-June, a sharp contrast to ₹361 crore profit estimated by 14 brokerages polled by Bloomberg. The loss was more glaring as a 13% year-on-year growth in Ebitda (earnings before interest, tax, depreciation and amortization) during the March quarter had boosted sentiment, as a result of which the stock had risen.

However, by the looks of it, execution woes, especially in its core power sector business, have made a comeback. The power business that contributes nearly 80% to total revenue contracted 25% year-on-year.