For the fourth quarter of FY24, Bharat Heavy Electricals Limited (BHEL) reported a year-over-year (YoY) decrease in its consolidated net profit of 25.6%. In comparison to the Rs 658.02 crore recorded in the same quarter of the previous year, the firm posted a net profit of Rs 489.62 crore. However, the state-owned producer of power-generating equipment had a little rise in operating revenue of 0.4%; in Q4 FY24, the company's income from operations was Rs 8260.25 crore, up from Rs 8226.99 crore in the same period of FY23.

Compared to Rs 1049 crore in the same quarter of the previous year, BHEL's profits before interest, tax, depreciation, and amortisation (EBITDA) decreased by 30.6% to Rs 727.9 crore in Q4 FY24. 

Amit Anawani, a research analyst at Prabhudas Lilladher, claims that BHEL's standalone revenue was unchanged year over year due to strong industrial segment sales growth offsetting the -4.3% YoY fall in power segment sales. The poor operational performance caused PAT to drop by 24.9% YoY, but this was somewhat mitigated by greater other income and a reduced effective tax rate. "The industry margin dropped sharply to 8.5 percent from a high base of 21.2 percent in Q4FY23, while power margin improved to 19.4 percent against 18.6 percent in Q4FY23," Anawani continued.

BHEL's order book

According to BHEL's order book, the company received orders of Rs. 780 billion. The quarter's OI was Rs 420 billion. Thanks to industry orders worth Rs 220 billion and 9.6 GW of thermal order wins, FY24 saw significant order inflows of Rs 520 billion in electricity. By FY32, 50GW of coal-based capacity is expected to be older than 40 years, according to ICICI Securities. According to the statement, BHEL is attempting to diversify its order book. Recently, it received a Vande Bharat contract for Rs235 billion to deliver 80 trainsets and provide 35 years of servicing for them in partnership with Titagarh Wagons. BHEL has a 150 billion rupee stake in the order. Analysts at ICICI Securities stated, "We expect more Vande Bharat orders in the next two to three years, where BHEL again stands to benefit from its experience."

"With a healthy and executable order book (Rs 1300 billion) and continued momentum in tendering of new projects in a limited competitive environment, we expect the company to gradually regain its growth trajectory, Q3FY25 onwards," stated JM Financial's Sudhanshu Bansal in the meanwhile.

Furthermore, according to ICICI Securities, based on the national electric plan for 2022, India's peak demand is expected to reach 375GW by FY32 at a 6% CAGR or 330GW at a 5% CAGR. "The government is also planning to install 50GW of thermal energy and 75GW of storage in anticipation of higher peak demand. At around 20% of its potential for operation, storage will still be in its infancy by 2032. Therefore, in our opinion, India could need to strengthen its portfolio of thermal power plants in order to guarantee a seamless energy transition. When India's Minister of electricity, RK Singh, stated that 80GW of thermal capacity must be added by construction in order to satisfy India's electricity demands, it reinforced our belief that more coal-based thermal capacity is necessary. Accordingly, we think India could need to add 5GW of coal-based thermal capacity annually over the following 10 years, according to ICICI Securities.

The government intends to add 88GW of thermal power plants by FY32, according to JM Financial as well. Ten GW of projects have already been put out to tender, while another 27 GW are in the process. For the upcoming several years, the business anticipates purchasing 10–12 GW annually.