BHEL Q3 Results: Other Income Aids Profit Growth, Margin Expands to 6.4%
BHEL delivered strong Q3 results with net profit reaching ₹390 crores and revenue growing 16.4% to ₹8,473 crores, though falling short of analyst estimates. The company achieved significant margin expansion with EBITDA margins improving to 6.4% from 4.2%, while other income more than doubled to ₹219 crores, substantially contributing to profitability. In a strategic move, the board approved closure of the planned ₹345 crore Railway Propulsion Systems plant in Varanasi, redirecting production to existing facilities.
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Bharat Heavy Electricals Limited (BHEL) announced its unaudited financial results for the quarter ended 31st December, showcasing strong operational performance with enhanced profitability margins. The government-owned power equipment manufacturer reported robust growth across key financial metrics, with other income playing a significant role in boosting overall profitability.
Financial Performance Highlights
BHEL's financial performance demonstrated significant improvement across major parameters, though revenue fell short of analyst expectations. The company's profitability was notably aided by a substantial increase in other income during the quarter.
| Metric | Q3 Current Year | Q3 Previous Year | Change (%) |
|---|---|---|---|
| Revenue from Operations | ₹8,473.00 cr | ₹7,277.00 cr | +16.4% |
| Net Profit | ₹390.00 cr | ₹134.00 cr | +191.0% |
| EBITDA | ₹546.00 cr | ₹305.00 cr | +79.0% |
| EBITDA Margin | 6.4% | 4.2% | +220 bps |
| Other Income | ₹219.00 cr | ₹108.00 cr | +102.8% |
The revenue figure of ₹8,473 crores came in below the Bloomberg consensus estimate of ₹8,827 crores, while net profit expectations were pegged at ₹516 crores by analysts.
Operational Efficiency and Margin Expansion
The company demonstrated strong operational efficiency with EBITDA margins expanding significantly to 6.4% from 4.2% in the corresponding previous quarter. This margin expansion reflects improved cost management and operational leverage across business segments.
Other income emerged as a key contributor to profitability, more than doubling from the previous year to ₹219 crores. This substantial increase in other income played a crucial role in supporting the overall profit growth during the quarter.
Strategic Business Decision - Varanasi Plant Closure
In a significant strategic move, BHEL's board approved the short closure of the establishment of a new plant in Varanasi, citing the current business landscape. The products originally planned for this new location will now be manufactured at other existing units.
| Project Details | Specifications |
|---|---|
| Original Investment | ₹345.00 cr |
| Project Type | Railway Propulsion Systems |
| Funding Structure | Mix of debt and equity |
| Announcement Date | January 2024 |
| Timeline | Two years (originally) |
This decision reflects the company's adaptive approach to capital allocation in response to changing market conditions and operational requirements.
Market Response and Stock Performance
Shares of BHEL experienced volatile trading following the results announcement, initially declining as much as 3% before recovering to trade relatively unchanged at ₹265.20. Despite the mixed quarterly performance, the stock has delivered strong returns over the past year, rising 23% in the last 12 months, reflecting investor confidence in the company's long-term prospects.
Historical Stock Returns for Bharat Heavy Electricals
| 1 Day | 5 Days | 1 Month | 6 Months | 1 Year | 5 Years |
|---|---|---|---|---|---|
| +1.38% | -1.27% | -2.20% | +17.11% | +31.89% | +536.88% |
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