After tumbling 46% in the past year, shares of Bharat Heavy Electricals Ltd (BHEL) hit a 52-week low of ₹33.4 last week. Lights seem to be dimming on this capital goods manufacturer as cash burn remains high. Poor order flows, weak execution, high receivables and working capital requirements continue to daunt the state-run company.
The biggest concern for investors is BHEL’s negative operating cash flows. This is partly because nearly half of its order book accrues from state government projects, where payment receipts are challenging.
Given the slowdown and liquidity crunch in the economy, execution is not expected to pick up in the near term. Working capital levels are likely to remain elevated.
