BHEL: Full Form, Functions, Latest Financials & Samco Star Ratings

The BHEL full form is Bharat Heavy Electricals Limited. It is one of the largest manufacturing and engineering companies in India. BHEL is the largest producer of power plants in India. It was established in 1964 and is wholly owned by the Government of India. BHEL is also involved in construction, servicing, and evaluation of a wide range of products from key sectors like transportation, energy, water, oil and gas, defence, and transmission.

History of BHEL: 

1955 – The Government of India and Associated Electrical Industries (AEI) established Heavy Electricals India Ltd. (HEIL) to manufacture heavy electrical equipment in India. 1964 – Bharat Heavy Electricals Limited was incorporated in the year 1964 with the aim of managing three  plants for HEIL. 1974 – BHEL and HEIL were merged under one single entity BHEL. 1980s – BHEL had started supplying 500 MW thermal power equipment. 1990s – BHEL entered the field of wind energy, HVDC power transmission and the technology of superconductivity. They became the first public sector company to obtain an ISO 9000 and ISO 14000 accreditation. 2004 – BHEL received an MOU Award for Excellence in Performance. It was also awarded a FICCI Award for environmental conservation and pollution control in the year 2005-06. 2018 – BHEL signed a technology transfer agreement with Indian Space Research Organisation (ISRO) for the manufacture of space-grade Lithium-ion cells.

BHEL’s Logo

Key Personnel at BHEL:

1. Dr. Nalin Shinghal- Chairman & Managing Director
2. Shri Shashank Priya- Additional Secretary & Financial Adviser
3. Shri Amit Mehta- Joint Secretary, Department of Heavy Industry
4. Shri Subodh Gupta- Director (Finance)
5. Shri Kamalesh Das- Director (E,R&D)
6. Shri Anil Kapoor- Director (HR)
7. Ms. Renuka Gera- Director (IS&P)

Latest Shareholding Pattern of BHEL (As on 8th September 2021)

Shareholding Pattern	Mar 2020	Jun 2020	Sep 2020	Dec 2020	Mar 2021
Promoters	63.17%	63.17%	63.17%	63.17%	63.17%
Foreign Institutional Investors (FIIs)	9.36%	5.09%	4.24%	4.34%	4.47%
Domestic Institutional Investors (DIIs)	17.81%	18.14%	15.58%	13.51%	12.49%
Public	9.66%	13.60%	17.01%	18.98%	19.87%

Latest Profit and Loss Account of BHEL (As on 8th September 2021)

	Mar 2018	Mar 2019	Mar 2020	TTM
Sales	28,827	30,441	21,490	17,309
Expenses	27,174	28,409	21,623	20,357
Operating Profit	1,653	2,032	-133	-3,049
OPM	6	7	-1	-18
Other Income	679	662	590	393
Interest	330	378	613	467
Depreciation	787	476	503	473
Profit before tax	1,215	1,840	-659	-3,596
Tax	64	46	-123	25
Net Profit	441	1,005	-1,466	-2,697

[Read More: How to Read an Income Statement of a Company]

Latest Balance Sheet of BHEL (As on 8th September 2021)

	Mar 2018	Mar 2019	Mar 2020	Mar 2021
Share Capital	734	696	696	696
Reserves	31,601	30,208	27,964	25,287
Borrowings	110	2,598	5,077	4,951
Other Liabilities	31,495	30,987	27,589	25,025
Total Liabilities	63,940	64,490	61,327	55,960
Fixed Assets	3,073	2,970	2,817	2,491
Cwip	203	235	314	420
Investments	429	152	162	185
Other Assets	60,235	61,132	58,034	52,864
Total Assets	63,940	64,490	61,327	55,960
Inventories	6,730	8,356	9,451	7,914
Trade Receivables	14,065	11,863	7,109	4,035
Cash & Bank	11,176	7,504	6,419	6,701
Loans and Advances	14,282	14,720	13,042	14,084
Trade Payables	10,520	11,329	8,881	6,570

[Read More: How to Read a Balance Sheet of a Company]

Latest  Key Financial Ratios of BHEL (As on 8th September 2021)

Market Cap (Cr): 19256	Face Value (₹): 2	EPS (₹): -6.47
Book Value (₹): 74.6	Roce (%): -9.69	Debt to Equity: 0.20
Stock P/E: 0	ROE (%): -9.88	Dividend Yield (%): 0
Revenue (Cr): 16,417	Earnings (Cr): -1925	Cash (Cr): 6,701
Total Debt (Cr): 4,951	Promoter’s Holdings (%): 63.17

Latest Mutual Funds Holdings & Trends of BHEL 

Schemes	Quantity	As on
ADITYA BIRLA SUN LIFE ARBITRAGE FUND – GROWTH	2,483	31-08-2021

Valuation Analysis Of BHEL (As on 8th September 2021)

Valuation analysis helps you analyse how overvalued or undervalued a stock is using the margin of safety index. Watch this video to know how to find undervalued stocks in the market.  It is the difference between the intrinsic value and the current value of a share. Intrinsic value is the true value of a share.

From the investor’s perspective –

If the market price is significantly lower than the stock’s intrinsic value, the stock has a high margin of safety. It is a buy signal.

From a seller’s point of view –

If the market price is significantly higher than the intrinsic value, it is a short sell opportunity. BHEL has a high margin of safety

Latest Samco Stock Ratings of BHEL : 0.5 out of 5 Stars (As on 8th September 2021) PROS

• Asset-Light Company: BHEL has a high asset turnover ratio of 5.22. A high asset turnover ratio is a powerful driver of return on equity and can boost shareholder returns. As the business increases its revenues and earnings, a higher asset turnover ratio will result in less dilution.

CONS

• Low Sustainable Return on Equity (ROE) in the Long Run: The company’s ROE  is lower than its estimated cost of capital. This means  that the underlying firm would lose value over time as a result of its inability to generate higher returns on capital.

• Low Return on Capital Employed: BHEL is unable to generate attractive ROCE. This impairs its ability to generate high returns of shareholders after accounting for taxes, depreciation etc.

• Poor Cash Flow Conversion: BHEL’s cash conversion ratio of -21.16%, is extremely poor. This means that increase in profits haven’t translated to higher cash flows for the company and increase in working capital investments, which is bad for shareholders.

• Negative operating earnings and interest coverage ratio:The company has negative operating earnings and a negative Interest coverage ratio of -6.53 times. This means that it does not have enough operating earnings to pay interest. This is extremely negative for investors.

• Highly Cyclical Industry: BHEL operates a highly cyclical business with  unpredictably high earnings and cash flows. This will result in extremely high stock price volatility.

• Low pricing power and high competition: BHEL has extremely low pricing power but high competition which can significantly hurt shareholder’s returns.

• Poor Capital Allocation: BHEL has a disproportionately high amount of assets i.e. 94.47% tied up in working capital, cash, loans and advances. This reflects poorly on capital allocation strategy, which negatively impacts shareholders returns.

• Poor Working Capital Cycle: BHEL has a very poor working capital cycle of 626 days. This reduces its free cash flow generation and has a negative impact on shareholder value and returns.
• Extremely Speculative Stock: BHEL’s stock is extremely speculative, which is expected to have a negative impact on long-term shareholders.

• Low Shareholder Pedigree: BHEL’s long-term shareholder base is quite weak. Majority of its shareholders are short-term investors. This increases volatility and speculation in the stock which hurts the long-term investors.

Competitor Analysis of BHEL (As on 8th September 2021)

Company	Price	Market Cap (Cr)	P/E	EPS (Rs)	Dividend Yield (%)	ROE (%)
BGR ENERGY SYSTEMS LTD.	58.1	411	0	-53.69	0	-41.5
Transformers & Rectifiers India Ltd	28.3	378	28.4	1	0.35	2.11
Swelect Energy Systems Ltd	217.95	335	19.9	7.3	1.36	3.57

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