Bharat Earth Movers (BEML) - 2QFY2016 Result Update - Angel Broking

BEML reported standalone sales of Rs. 621cr for 2QFY2016, up 37.7% yoy (ahead of our expectation of Rs. 599cr). At the EBITDA level, the company reported losses of Rs. 13cr, in-line with our expectation. The impact of losses at EBITDA level was seen at the PAT level too, as the company reported a net loss of Rs. 30cr, against our loss expectation of Rs. 12cr. Notably, the quantum of loss has narrowed down on a yoy basis.

BEML's order book as of 2QFY2016 stands at ~Rs. 6,376cr, which gives revenue visibility for over the next few quarters.

Valuation: During the quarter, BEML impressed us by reporting strong execution, mainly seen across the Construction & Mining Equipments segment. Also, BEML has reported a Rs. 1,771cr of order inflows, across all the 3 business segments. Reported order inflows, emerging bid pipeline, indicate us that BEML should end FY2016E with strong order inflows of Rs. 2,900cr. A strong awarding environment should lead to improvement in the execution. Accordingly, we expect BEML to report a 19.4% top-line CAGR during FY2015-17E. At the back-drop of improved execution and better absorption of fixed costs, we expect BEML to report a strong 529.2% PAT CAGR during FY2015-17E.

On the whole, we are optimistic that the company would report strong earnings going forward, given the improving award activity environment across all 3 business segments, BEML has a strong market positioning. We continue to maintain our NEUTRAL rating on the stock.

Shares of BEML LTD. was last trading in BSE at Rs.1093.4 as compared to the previous close of Rs. 1114.2. The total number of shares traded during the day was 18058 in over 2423 trades.

The stock hit an intraday high of Rs. 1115 and intraday low of 1087. The net turnover during the day was Rs. 19927266.

Source : Equity Bulls

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