Bharat Heavy Electricals Limited (BHEL), the leading power generation equipment manufacturer in India, released its BHEL Q4 results on May 21st, 2024. While the report reveals a decline in net profit compared to the previous year, it also highlights a positive development – a significantly increased order book.

Profit Dips Despite Flat Revenue

BHEL’s Q4 FY24 results paint a picture of contrasting trends. The company’s net profit witnessed a year-on-year decline of 25.6%, falling from ₹658 crore in Q4 FY23 to ₹489.6 crore in Q4 FY24. This decrease could be attributed to various factors, including project execution delays, rising input costs, or subdued demand in certain segments.

However, on the revenue front, the news is a bit more positive. BHEL’s total income for the quarter witnessed a marginal rise of 0.4%, climbing from ₹8,338.61 crore to ₹8,416.84 crore. Although the increase is modest, it indicates that BHEL is likely on track with its revenue generation goals.

EBITDA Falls, Margins Contract

The company’s Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) also declined in Q4 FY24. EBITDA dropped by 30.6% from ₹1,049 crore in the same period last year to ₹728 crore this year. This decline suggests a potential decrease in operational efficiency or profitability.

Furthermore, the EBITDA margin contracted from 12.8% in Q4 FY23 to 8.8% in Q4 FY24, reflecting a reduction in profit per rupee of revenue earned.

Despite the dip in profits, a significant bright spot emerges in BHEL’s Q4 report: the order book. The company has managed to more than double its order book size compared to the previous year. It currently stands at a staggering ₹1,00,000 crore, offering a promising outlook for future revenue generation. This robust order book indicates continued trust from clients and potentially signifies upcoming growth for BHEL.

Dividend Declared

BHEL also declared a final dividend of 12.50% or ₹0.25 per share (face value ₹2) for FY24, offering some relief to its shareholders. The market reacted negatively to BHEL’s Q4 results. The company’s share price witnessed a significant drop of nearly 8% following the announcement. This reaction likely reflects investor disappointment concerning the profit decline.

BHEL Q4 results present a mixed picture. While the profit decline and margin contraction raise concerns, the substantial increase in the order book offers a ray of hope. BHEL’s future performance will depend on its ability to efficiently execute projects, manage costs, and capitalize on its sizable order book to translate potential into actual revenue and profit growth.