The Indian stock market witnessed an unusual move when BHEL’s shares dropped almost three‑quarters after the company released its third‑quarter earnings. At first glance, the numbers looked encouraging – revenue climbed, profit improved, and the order book grew. Yet the market answered with a sharp sell‑off. Understanding the gap between earnings and share price is essential for any investor who wants to read beyond the headline figures.
BHEL, the state‑owned engineering giant that supplies power, rail, and defence equipment, has long been a barometer for the health of India’s infrastructure sector. When a company as established as BHEL reports a better than expected quarter, the reaction is normally positive. That the opposite happened signals deeper concerns that go beyond quarterly performance. In this article we unpack those concerns and outline what they mean for investors looking at BHEL today.
In the third quarter of the fiscal year, BHEL posted a modest rise in both revenue and net profit. The company’s sales from the power and rail segments edged up, while defence contracts added a small cushion. Year‑on‑year, revenue grew in the range of 8–10 percent, and net profit rose by about 12 percent. The operating margin widened slightly, reflecting better cost control on manufacturing and procurement. These figures beat the consensus estimate that analysts had set for the quarter, giving the company a brief window of positive momentum.
However, the earnings report also highlighted several structural issues. The company’s debt load, which sits at over ₹20,000 crores, remained a point of concern. Working capital requirements continued to rise as raw material prices fluctuated, and the company’s current ratio hovered just above 1.5. In addition, the order backlog – the volume of contracts yet to be executed – grew only marginally, suggesting that new business is arriving at a slower pace than in previous years.
These mixed signals
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