BHEL-3QFY11 RU-210111

8/7/2019 BHEL-3QFY11 RU-210111

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Please refer to important disclosures at the end of this report 1

(` cr) 3QFY11 3QFY10 % chg (yoy) 2QFY11 % chg (qoq)

Revenues 9,023 7,229 24.8 8,491 6.3

EBITDA 2,072 1,562 32.7 1,632 26.9

EBITDA margin (%) 23.0 21.6 140bp 19.2 380bp

Reported PAT 1,403 1,073 30.8 1,142 22.8

Source: Company, Angel Research

BHEL’s 3QFY2011 results were ahead of our expectations, largely aided by margin expansions at the EBIDTA and PAT levels. The numbers were positively impacted by the one-off adjustment in turnover, PBT and PAT arising on account

of modifications in the method of calculating the percentage completion forrevenue recognition. Inclusive of the above adjustments, BHEL’s revenue grew by 24.8% yoy, while PAT increased by 30.8% yoy. We maintain our Neutral view on

the stock.

Strong growth with impressive margins: For 3QFY2011, the company’s revenueposted a robust growth of 24.8% yoy to ` 9,023cr. EBITDA also increased by 32.7% yoy to ` 2,072cr on the back of the 136bp yoy improvement in margin to23%. The margin improvement was mainly facilitated by the sharp decline in rawmaterial costs, which contracted to 55.8% (58.8%) yoy. Staff cost also fell to14.9% of revenues compared to 17% during the corresponding period of theprevious year. Other expenses rose sharply by 59% yoy to ` 793cr (` 499cr) mainly on account of the ` 100cr provisioning for liquidated damages. Strong growth

coupled with higher margins led to the 30.8% yoy growth in PAT to ` 1,403cr.Excluding the one-off adjustments, the growth in turnover and PAT stood at 18.7%and 25.2%, respectively.

Outlook and valuation: The Indian power equipment industry is undergoingstructural changes post the increasing preference for fuel-efficient andsupercritical technologies. Given the growth prospects in the domestic powersector, few Indian companies have set up or have initiated the process of settingup local manufacturing facilities in collaboration with leading internationalplayers. As competition intensifies from both the domestic as well as overseasplayers, we do not expect BHEL to maintain its existing profitability margins andincrease its current market share in the long term. At the CMP of ` 2,218, thestock is quoting at 19.2x FY2011E EPS and at 15.7x FY2012E EPS. Given the

long-term structural concerns, we maintain our Neutral view on the stock.

Key Financials

Y/E March (` cr) FY2009 FY2010 FY2011E FY2012E

Net Sales 26,212 32,880 40,234 48,409

% chg 35.8 25.4 22.4 20.3

Net Profit 3,126 4,311 5,639 6,929

% chg 9.3 37.9 30.8 22.9

EBITDA (%) 13.9 16.9 19.1 19.5

EPS (`) 63.9 88.1 115.2 141.6

P/E (x) 34.7 25.2 19.2 15.7

P/BV (x) 8.4 6.8 5.5 4.4

RoE (%) 26.4 29.9 31.3 30.4RoCE (%) 28.9 33.3 33.1 32.1

EV/Sales (x) 3.8 3.0 2.4 1.9

EV/EBITDA (x) 23.7 17.8 11.5 9.2


NeutralCMP ` 2,218

Target Price -

Investment Period -

Stock Info

Sector Capital Goods

Market Cap (` cr) 1,08,551

Beta 0.8

52 Week High / Low 2,695/2,060

Avg. Daily Volume67,579

Face Value (` ) 10

BSE Sensex 19,008

Nifty 5,697

Reuters Code BHEL.BO

Bloomberg Code BHEL@IN

Shareholding Pattern (%)

Promoters 67.7

MF / Banks / Indian Fls 16.3

FII / NRIs / OCBs 14.1

Indian Public / Others 1.9

Abs. (%) 3m 1yr 3yr

Sensex (6.2) 11.5 8.0

BHEL (12.8) (3.5) 4.9

John Perinchery

+91 22 3935 7800 Ext: 6817

[email protected]

Hemang Thaker

+91 22 3937 7800 Ext: 6840

[email protected]

BHEL

Performance highlights

3QFY2011 Result Update | Capital Goods

January 21, 2011

8/7/2019 BHEL-3QFY11 RU-210111


BHEL | 3QFY2011 Result Update

January 21, 2011 2

Exhibit 1: 3QFY2011 performance

(` cr) 3QFY11 3QFY10 % chg (yoy) 2QFY11 % chg qoq 9MFY11 9MFY10 % chg yoy

Net Sales 8,849 7,100 24.6 8,328 6.3 23,657 19,321 22.4

Other operating income 174 129 35.0 162 7.3 457.64 306.96 49.1

Total income 9,023 7,229 24.8 8,491 6.3 24,115 19,628 22.9

Value of Production 9,121 7,639 19.4 8,717 5 24,442 20,065 22

Stock adjustments (276) (553) (393) (794) (762)

Raw Material 5,086 4,495 13.1 5,357 (5.1) 14,378 12,042 19.4

(% of Value of Production) 55.8 58.8 61.5 58.8 60.0

Employee Cost 1,349 1,227 9.9 1,264 6.7 3,951 3,410 15.9

(% of sales) 14.9 17.0 14.9 16.4 17.4

Other Expenses 793 499 59.0 630 25.9 1,912 1,553 23.1

(% of sales) 8.8 6.9 7.4 7.9 7.9

Total Expenditure 6,952 5,668 22.7 6,858 1.4 19,446 16,243 19.7EBITDA 2,072 1,562 32.7 1,632 26.9 4,669 3,385 37.9

(EBITDA %) 23.0 21.6 19.2 19.4 17.2

Interest 14 7 109.7 6 144.0 24 16 54.3

Depreciation 145 104 39.4 134 7.9 406 293 38.3

Other Income 153 193 (20.9) 162 (5.6) 478 616 (22.3)

PBT 2,065 1,644 25.6 1,654 24.9 4,718 3,692 27.8

(% of sales) 22.9 22.7 19.5 19.6 18.8

Total Tax 662 572 15.8 512 29.3 1,504 1,291 16.5

(% of PBT) 32.1 34.8 31.0 31.9 35.0

Reported PAT 1,403 1,073 30.8 1,142 22.8 3,213 2,401 33.8

(% of sales) 15.6 14.8 13.5 13.3 12.2


Exhibit 2: Actual v/s Estimates

(` cr) Actual Estimates Var (%)

Revenue 9,023 9,398 (4.0)

EBITDA 2,072 1,692 22.5

PAT 1,403 1,135 23.6

EPS (` ) 28.7 23.2 23.6


8/7/2019 BHEL-3QFY11 RU-210111



January 21, 2011 3

One-off adjustment positively impacts turnover and profit

As per the revenue recognition practice followed by the company, ~97.5% of the

realisable contract value is recognised as revenues during the execution period

and the balance 2.5% is recognised only after completion of the trial operations.

BHEL also follows the practice of providing for warranties @2.5% of the contract

value on completion of the trial operations. The above two practices entail

simultaneous recognition of residual revenues @2.5% of the contract value and

creation of corresponding warranty obligations @2.5% of the contract value only

after the trial operations are over.

During the past few quarters, it was observed that in few of the contracts,

aggregate revenues recognised during the execution period deviated from the

benchmark 97.5% on account of the variations in the total estimated cost and the

actual cost incurred. These deviations had a consequential impact on the

percentage of revenues that were recognised post completion of the trial

operations leading to a mismatch (ranging from 1% to 5%) vis-à-vis the

provisioning for warranties @2.5% of the contract revenue.

Management informed that the deviations of the past are insignificant to materially

impact the recognition policy and hence have not been adjusted. However, with

increasing ticket size of contracts, the aggregate of the deviations has the potential

to materially impact the revenue recognition vis-à-vis the provisioning for

warranties, and hence the method of calculating the percentage completion has

been modified to remove the above mismatch. This modification would ensure

compliance with the existing policy where only 2.5% of the contract revenue is

recognised on completion of the trial operations with corresponding provision for

warranties. Management informed that the revised methodology would be

applied for future reporting periods as well.

The above modification, which incidentally relates to the ongoing contracts of the

current and earlier periods, resulted in a one-off net increase in turnover by

` 444cr during 3QFY2011. On the profitability front, PBT and PAT increased to the

extent of ` 88cr and ` 60cr, respectively. Inclusive of the above adjustments, BHEL’s

revenue grew by 24.8% yoy, while PAT increased by 30.8% yoy. Excluding the

above adjustments, the growth in turnover and PAT was at 18.7% and 25.2%,

respectively.

Operational improvements drive down raw material cost:

Various operational improvement initiatives undertaken in the past such as design

to cost and focus on lean manufacturing have enabled the company to lower its

raw material consumption. Also, better buying practices and the long-term

contracts with the material suppliers have helped the company source its materials

at competitive rates. We also note that ~50% of the contracts have a built in price

variation clause with a pass-through mechanism. For the remainder of the

contracts, BHEL would continue to focus on optimising the raw material

consumption. For FY2011, management expects the raw material cost to hold

steady at 59-60% of sales similar to FY2010 levels.

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January 21, 2011 4

Exhibit 3: Segment-wise performance

Y/E March (` cr) 3QFY11 3QFY10 % chg (yoy) 9MFY11 9MFY10 % chg (yoy)

Revenues

Power 7,282 5,709 27.6 19,647 15,706 25.1

Industry 2,143 1,802 18.9 5,477 4,730 15.8

Total Revenues 9,425 7,511 25.5 25,124 20,436 22.9

EBIT

Power 1,632 1,309 24.7 4,175 3,259 28.1

Industry 454 405 12.1 930 838 11.0

Total EBIT 2,086 1,714 21.7 5,105 4,096 24.6

Revenue mix (%)

Power 77.3 76.0 78.2 76.9

Industry 22.7 24.0 21.8 23.1

EBIT Margin (%)Power 22.4 22.9 21.3 20.7

Industry 21.2 22.5 17.0 17.7

Total 22.1 22.8 20.3 20.0


Consistent performance by power segment: For 3QFY2011, the power division

continued to report strong growth of 27.6% yoy to ` 7,282cr (` 5,709cr), while the

industry division reported steady growth of 18.9% yoy to ` 2,143cr (` 1,802cr).

However, EBIT margin of the power division declined marginally by 50bp to

22.4%. For the cumulative period up to 9MFY2011, margins improved by 60bp

yoy to 21.3%. The industry division reported a 130bp dip in margin to 21.2%

during the quarter.

Steady margins coupled with strong revenue growth enabled the power division to

report 24.7% yoy growth in EBIT to ` 1,632cr, while the industry division reported

moderate growth of 12.1% yoy to ` 454cr due to the dip in margins. The

company’s long-term strategy would be to maintain a balanced order backlog and

revenue portfolio spread across the power and industry divisions in the ratio of

70:30.

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January 21, 2011 5

Order inflow: During 3QFY2011, the company’s order inflow fell by 21% yoy to

` 12,592cr. The power division accounted for ` 7,877cr, while the industrial and

export divisions accounted for ` 2,735cr and ` 1,980cr, respectively. Order backlog

at the end of 3QFY2011 stood at ~` 1, 57,611cr. Order inflow during 9MFY2011

aggregated to ` 36,524cr and remained nearly flat compared to corresponding

period of the previous year. Management has maintained its guidance of annual

order inflow to aggregate to ~` 60,000cr during FY2011.

Notable orders received during the quarter:

5X270MW Nashik Phase II (India bulls Power) ` 2,875cr

5X270MW Amravati Phase II (Elena Power) ` 2,883cr

1X600MW Rayalaseema Unit No 6 (APGENCO) ` 2,875cr

672MW Marib Phase II Gas Turbine ` 1,976cr

Exhibit 4: Order inflow


Exhibit 5: Order Backlog


1

4,500

1

4,350

15,107

15,580

12,4

00

8,000

16,000 22,614

10,82

4

13

,500

12,592

-

5,000

10,000

15,000

20,000

25,000

1QFY09

2QFY09

3QFY09

4QFY09

1QFY10

2QFY10

3QFY10

4QFY10

1QFY11

2QFY11

3QFY11

(` cr)

95,000

104,000

113,584

117,000

124,400

125,800

134,000

143,800

148,000

153,737

157,611

-

32,000

64,000

96,000

128,000

160,000

1QFY09

2QFY09

3QFY09

4QFY09

1QFY10

2QFY10

3QFY10

4QFY10

1QFY11

2QFY11

3QFY11

(` cr)

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January 21, 2011 6

Investment Arguments

Dominant player in the domestic power equipment market: BHEL is the largest

supplier of power equipment in India with a wide product portfolio consisting of

boilers, gas turbines, fabric filters, steam generators and switch gears, among

others. The company primarily caters to power-generating companies by offering

steam turbines, generators, boilers and matching auxiliaries of up to 800MW

rating, including super-critical sets of 660/800MW. The company has facilities that

can go up to 1,000MW of unit size. While competition is intensifying due to high

prospects in the power sector, BHEL continues to be strong, especially in the boiler

turbine generator (BTG) category, which forms a key part of the power plant. As a

fully integrated power equipment player, BHEL enjoys a strong domestic presence

in the power equipment market.

Well-positioned for future: The Indian power sector is likely to witness massive

capacity additions of ~150,000MW over the next decade. BHEL, being a

dominant domestic player, is expected to be the major beneficiary of the unfolding

opportunities in the power equipment space. Furthermore, the company is

augmenting its manufacturing capacity from the current 15GW to 20GW, after

having introduced new ratings of 150MW, 270MW, 525MW and 600MW in the

sub-critical segment and 660MW and 800MW in the super-critical segment.

Strategic tie-ups to enhance competitive edge: BHEL is taking various initiatives,

including strategic alliances through joint ventures (JV), in the supercritical

technology and technology-sourcing domains. To pursue inorganic growth, tie-ups

are being identified in the areas of: a) transmission, with a focus on 765kV and

1,200kV segments (JV with Toshiba for transmission products); b) photovoltaics

(PV), with a focus on manufacturing silicon wafers, solar cells, modules and setting

up a greenfield PV project, and c) nuclear, with a focus on building special nuclear

reactors for which GE-Hitachi has signed an agreement with NPCIL and BHEL.

Outlook and valuation

The Indian power equipment industry is undergoing structural changes post the

increasing preference for fuel-efficient and supercritical technologies. Given the

growth prospects in the domestic power sector, few Indian companies have set up

or have initiated the process of setting up local manufacturing facilities in

collaboration with leading international players. As competition intensifies from

both domestic as well as overseas players, we do not expect BHEL to increase its

current market share in the long term. At the CMP of ` 2,218, the stock is quoting

at 19.2x FY2011E EPS and at 15.7x FY2012E EPS. Given the long-term structural

concerns, we maintain our Neutral view on the stock.

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January 21, 2011 7

Exhibit 6: Key Assumptions

Particulars (%) FY11E FY12E

Order Inflow Growth - Power (5.0) (2.5)

Order Inflow Growth - Industry 15.0 10.0

Order Inflow Growth - Exports 10.0 5.0

Order Inflow Growth - Combined 0.5 1.3

Order Backlog Growth - Combined 12.1 6.0

Order Book Coverage

Order Book/Sales (x) 3.9 3.4

Order Book/Fwd Sales (x) 3.2 3.1

Order Book to Sales execution (%) 29.0 31.1


Exhibit 7: Angel EPS forecast

(`) Angel forecast Bloomberg consensus Var (%)

FY2011E 115.2 113.6 1.4

FY2012E 141.6 138.5 2.2


Exhibit 8: Premium/Discount to Sensex P/E


Exhibit 9: One year forward P/E


Exhibit 10: Comparative valuation

Company Reco. CMP Tgt. Price Upside P/BV(x) P/E(x) FY2010-12E RoCE (%) RoE (%)

(`) (`) (%) FY11E FY12E FY11E FY12E EPS CAGR FY11E FY12E FY11E FY12E

ABB* Neutral 742 - - 6.0 5.0 32.1 24.2 31.1 20.3 22.3 18.6 20.8

Areva T&D* Sell 309 260 - 7.6 6.4 42.3 29.4 14.6 13.9 18.0 18.6 22.7

BHEL Neutral 2,218 - - 5.5 4.4 19.2 15.7 26.8 33.1 32.1 31.3 30.4

BGR Energy Accum. 640 720 12.5 5.1 4.0 16.5 13.3 31.1 18.2 17.7 34.7 33.6

Crompton Greaves Buy 284 375 32.1 5.7 4.5 20.3 17.5 10.0 38.5 36.9 31.4 28.4

Jyoti Structures Buy 118 215 82.0 1.6 1.3 8.6 6.8 29.6 18.8 19.3 20.2 20.6

KEC International Buy 91 130 42.8 2.5 2.0 10.0 7.9 22.2 18.5 18.9 27.6 26.2

Thermax Neutral 705 - - 6.3 5.0 23.7 18.8 31.0 30.9 31.0 29.3 29.5

Source: Company, Angel Research.*Note: December year ending

(20)

0

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Absolute Premium 5-yr Average Premium

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January 21, 2011 8

Profit and Loss Statement

Y/E March (` cr) FY2007 FY2008 FY2009 FY2010 FY2011E FY2012E

Net Sales 17,238 19,305 26,212 32,880 40,234 48,409

Other oper. income - - - - - -

Total operating income 17,238 19,305 26,212 32,880 40,234 48,409

% chg 28.9 12.0 35.8 25.4 22.4 20.3

Net Raw Materials 9,487 10,662 16,030 19,307 23,646 28,934

Other Mfg costs 2,181 2,754 3,555 2,854 3,219 3,994

Personnel 2,369 2,608 2,984 5,153 5,693 6,056

Other - - - - - -

Total Expenditure 14,038 16,024 22,569 27,315 32,558 38,983

EBITDA 3,200 3,281 3,643 5,566 7,676 9,425

% chg 40.2 2.5 11.1 52.8 37.9 22.8

(% of Net Sales) 18.6 17.0 13.9 16.9 19.1 19.5Depn. & Amort. 273 297 334 458 579 686

EBIT 2,927 2,984 3,309 5,108 7,097 8,739

% chg 43.7 1.9 10.9 54.4 38.9 23.1

(% of Net Sales) 17.0 15.5 12.6 15.5 17.6 18.1

Interest & Othercharges

43 35 31 34 35 35

Other Income 824 1,445 1,497 1,516 1,614 1,956

(% of PBT) 22.2 32.9 31.4 23.0 18.6 18.3

Others - - - - - -

Recurring PBT 3,707 4,393 4,776 6,591 8,676 10,660

% chg 46.9 18.5 8.7 38.0 31.6 22.9

Extraordinary Exp/(Inc.) (28.9) (37.4) (73.1) - - -

PBT (reported) 3,736 4,430 4,849 6,591 8,676 10,660

Tax 1,321.4 1,571.1 1,710.6 2,280.0 3,036.6 3,731.1

(% of PBT) 35.4 35.5 35.3 34.6 35.0 35.0

PAT (reported) 2,415 2,859 3,138 4,311 5,639 6,929

Add: Share of earningsof associate

- - - - - -

Less: Min. interest (MI) - - - - - -

Prior period items - - - - - -

PAT after MI (reported) 2,415 2,859 3,138 4,311 5,639 6,929

ADJ. PAT 2,414 2,860 3,126 4,311 5,639 6,929

% chg 44.1 18.5 9.3 37.9 30.8 22.9

(% of Net Sales) 14.0 14.8 11.9 13.1 14.0 14.3

Basic EPS (`) 98.6 58.4 63.9 88.1 115.2 141.6

Fully Diluted EPS (̀ ) 49.3 58.4 63.9 88.1 115.2 141.6

% chg 44.1 18.5 9.3 37.9 30.8 22.9

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January 21, 2011 9

Balance Sheet


SOURCES OF FUNDS

Equity Share Capital 245 490 490 490 490 490

Preference Capital - - - - - -

Reserves& Surplus 8,544 10,285 12,449 15,426 19,633 25,016

Shareholders Funds 8,788 10,774 12,939 15,915 20,123 25,506

Minority Interest - - - - - -

Total Loans 89 95 149 128 128 128

Deferred Tax Liability (935) (1,338) (1,840) (1,527) (1,527) (1,527)

Total Liabilities 7,942 9,531 11,248 14,516 18,723 24,106

APPLICATION OF FUNDS

Gross Block 4,135 4,443 5,225 7,827 8,722 10,877Less: Acc. Depreciation 3,146 3,462 3,754 4,171 4,750 5,436

Net Block 989 981 1,470 3,656 3,971 5,440

Capital Work-in-Progress 303 658 1,157 289 895 239

Goodwill - - - - - -

Investments 8 8 52 80 80 80

Current Assets 20,980 27,906 36,901 42,933 51,332 60,293

Cash 5,809 8,386 10,315 9,788 12,830 14,670

Loans & Advances 1,141 1,388 2,424 2,814 3,219 3,873

Other 200 421 350 407 392 513

Current liabilities 14,337 20,022 28,333 32,442 37,554 41,946

Net Current Assets 6,643 7,884 8,568 10,491 13,778 18,346

Mis. Exp. not written off - - - - - -

Total Assets 7,942 9,531 11,248 14,516 18,723 24,106

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January 21, 2011 10

Cash Flow Statement


Profit before tax 3,736 4,430 4,849 6,591 8,676 10,660

Depreciation 273 297 334 458 579 686

(Inc)/Dec in Working Capital 1,043 1,336 1,244 (2,450) (244) (2,729)

Less: Other income 447 1,023 983 1,516 970 1,202

Direct taxes paid 1,484 1,974 2,213 2,280 3,037 3,731

Others 42 30 (18) (41) - -

Cash Flow from Operations 3,163 3,097 3,214 762 5,004 3,684

(Inc.)/Dec.in Fixed Assets (431) (664) (1,280) (1,734) (1,500) (1,500)

(Inc.)/Dec. in Investments - - (44) (27) - -

Other income 447 1,023 983 1,516 970 1,202

Cash Flow from Investing 16 359 (341) (245) (530) (298)

Issue of Equity - - - - - -Inc./(Dec.) in loans (469) 6 54 (22) - -

Dividend Paid (Incl. Tax) 692 873 974 1,334 1,432 1,546

Others (343) (11) (24) 313 - -

Cash Flow from Financing (1,161) (868) (919) (1,356) (1,432) (1,546)

Inc./(Dec.) in Cash 1,675 2,577 1,929 (527) 3,042 1,840

Opening Cash balances 4,134 5,809 8,386 10,315 9,788 12,830

Closing Cash balances 5,809 8,386 10,315 9,788 12,830 14,670

8/7/2019 BHEL-3QFY11 RU-210111



January 21, 2011 11

Key Ratios

Y/E March FY2007 FY2008 FY2009 FY2010 FY2011E FY2012E

Valuation Ratio (x)

P/E (on FDEPS) 45.0 38.0 34.7 25.2 19.2 15.7

P/CEPS 40.4 34.4 31.4 22.8 18.3 15.4

P/BV 12.4 10.1 8.4 6.8 5.5 4.4

Dividend yield (%) 1.1 0.7 0.8 1.1 1.1 1.2

EV/Sales 6.0 5.2 3.8 3.0 2.4 1.9

EV/EBITDA 28.7 27.1 23.7 17.8 11.5 9.2

EV/Total Assets 11.6 9.2 7.5 6.2 4.7 3.7

Per Share Data (`)

EPS (Basic) 98.6 58.4 63.9 88.1 115.2 141.6

EPS (fully diluted) 49.3 58.4 63.9 88.1 115.2 141.6

Cash EPS 54.9 64.5 70.7 97.4 121.3 143.9DPS 24.5 15.3 17.0 23.3 25.0 27.0

Book Value 179.5 220.1 264.3 325.1 405.3 503.7

Dupont Analysis

EBIT margin (%) 17.0 15.5 12.6 15.5 17.6 18.1

Tax retention ratio 0.6 0.6 0.6 0.7 0.7 0.7

Asset turnover (x) 5.1 7.0 10.1 7.4 6.0 5.3

ROIC (Post-tax) (%) 55.8 69.6 82.4 75.1 68.3 62.3

Cost of Debt (Post Tax) (%) 8.6 24.8 16.3 15.8 17.8 17.8

Leverage (x) (0.7) (0.8) (0.8) (0.6) (0.6) (0.6)

Operating RoE (%) 25.1 35.1 30.2 38.8 36.2 36.8

Returns (%)

RoCE (Pre-tax) 39.5 34.5 31.9 35.1 42.7 41.4

Angel RoIC (Pre-tax) 105.0 148.9 226.2 137.1 125.5 111.1

RoE 30.0 29.2 26.4 29.9 31.3 30.4

Turnover ratios (x)

Asset Turnover (Gross Block) 4.3 4.5 5.4 5.0 4.9 4.9

Inventory / Sales (days) 84 94 95 95 94 92

Receivables (days) 178 204 195 204 200 195

Payables (days) 66 75 72 74 72 71

W. cap. cycle (ex-cash) (days) 18 (9) (24) 8 8 19

Solvency ratios (x)

Net debt to equity (0.7) (0.8) (0.8) (0.6) (0.6) (0.6)

Net debt to EBITDA (1.6) (2.2) (2.5) (1.7) (1.5) (1.4)

Int. Coverage (EBIT / Int.) 76.2 96.2 124.5 152.5 221.2 271.2

8/7/2019 BHEL-3QFY11 RU-210111



January 21 2011 12

Research Team Tel: 022 – 3935 7800 E-mail: [email protected] Website: www. angelbroking.com

DISCLAIMER

This document is solely for the personal information of the recipient, and must not be singularly used as the basis of any investment

decision. Nothing in this document should be construed as investment or financial advice. Each recipient of this document should makesuch investigations as they deem necessary to arrive at an independent evaluation of an investment in the securities of the companies

referred to in this document (including the merits and risks involved), and should consult their own advisors to determine the merits and

risks of such an investment.

Angel Broking Limited, its affiliates, directors, its proprietary trading and investment businesses may, from time to time, make

investment decisions that are inconsistent with or contradictory to the recommendations expressed herein. The views contained in this

document are those of the analyst, and the company may or may not subscribe to all the views expressed within.

Reports based on technical and derivative analysis center on studying charts of a stock's price movement, outstanding positions and

trading volume, as opposed to focusing on a company's fundamentals and, as such, may not match with a report on a company's

fundamentals.

The information in this document has been printed on the basis of publicly available information, internal data and other reliablesources believed to be true, but we do not represent that it is accurate or complete and it should not be relied on as such, as thisdocument is for general guidance only. Angel Broking Limited or any of its affiliates/ group companies shall not be in any way responsible for any loss or damage that may arise to any person from any inadvertent error in the information contained in this report .

Angel Broking Limited has not independently verified all the information contained within this document. Accordingly, we cannot testify,nor make any representation or warranty, express or implied, to the accuracy, contents or data contained within this document. WhileAngel Broking Limited endeavours to update on a reasonable basis the information discussed in this material, there may be regulatory,compliance, or other reasons that prevent us from doing so.

This document is being supplied to you solely for your information, and its contents, information or data may not be reproduced,

redistributed or passed on, directly or indirectly.

Angel Broking Limited and its affiliates may seek to provide or have engaged in providing corporate finance, investment banking or

other advisory services in a merger or specific transaction to the companies referred to in this report, as on the date of this report or in

the past.

Neither Angel Broking Limited, nor its directors, employees or affiliates shall be liable for any loss or damage that may arise from or in

connection with the use of this information.

Note: Please refer to the important `Stock Holding Disclosure' report on the Angel website (Research Section). Also, pleaserefer to the latest update on respective stocks for the disclosure status in respect of those stocks. Angel Broking Limited andits affiliates may have investment positions in the stocks recommended in this report.

Disclosure of Interest Statement BHEL

1. Analyst ownership of the stock No

2. Angel and its Group companies ownership of the stock No

3. Angel and its Group companies' Directors ownership of the stock No

4. Broking relationship with company covered No

Note: We have not considered any Exposure below ` 1 lakh for Angel, its Group companies and Directors.

Ratings (Returns): Buy (> 15%) Accumulate (5% to 15%) Neutral (-5 to 5%)Reduce (-5% to 15%) Sell (< -15%)

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BHEL-3QFY11 RU-210111