BHEL Q3 Results: Stock falls after earnings miss; Labour code impact 'under evaluation'

Shares of Bharat Heavy Electricals Ltd. (BHEL) are seeing volatile moves, declining as much as 3%, on Monday, January 19, in response to its quarterly results.

BHEL's revenue grew by 16.4% from last year in the December quarter to ₹8,473 crore. The figure is lower than the Bloomberg consensus estimate of ₹8,827 crore.

Its Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) for the quarter rose by 79% from last year to ₹546 crore from ₹305 crore last year, while margins expanded to 6.4% from 4.2% in the same quarter last year. The Bloomberg consensus estimate had pegged the EBITDA figure to be ₹704 crore.

Net profit for the period rose to ₹390 crore from ₹134 crore last year. Profitability for BHEL was aided by a higher other income component.

BHEL's other income more-than-doubled from last year to ₹219 crore from ₹108 crore in the December quarter last year. The Bloomberg consensus estimate had pegged the figure to be ₹516 crore.

In a separate filing, the board of BHEL has approved short closure of the establishment of a new plant in Varanasi, citing the current business landscape. The products originally planned for this new location are now being planned at other existing units.

Back in January 2024, BHEL had announced that it is looking to set up a new Railway Propulsion Systems plant in Varanasi over the next two years. This move was supposed to entail a capital investment of close to ₹345 crore funded by a mix of debt and equity.

A short closure refers to a premature end to something, generally a contract, or order, before the complete obligation is met.

BHEL wrote in its note to account that the impact of the new Labour Codes, if any, will be evaluated and accounted for in accordance with the applicable accounting standards in the period in which such rules are notified and become effective.

Shares of BHEL fell as much as 3% after the results announcement, but have now recovered to trade little changed at ₹265.2. The stock has risen 23% in the last 12 months.