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MRP - Fair value of the stock .
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X

Bharat Heavy Electricals Ltd.

Large Cap

Evaluated by 16089 users |

BSE

: 500103 |

NSE

: BHEL |

Electric Equipment

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Standalone basis
The valuation guidance of this company is based on Standalone basis.
1. Right Stock
This company is among the most fundamentally sound companies on account of its consistent performance on both the colour-coding parameters - Value Creation & Business Growth.
2. Right Price
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Analysis of Financial Track Record

Data adjusted to bonus, split, extra-ordinary income, rights issue and change in financial year end
10 Year X-Ray
MoneyWorks4me Colour Coding
Value Creation To be investment worthy, a company has to create a shareholder value in excess of its cost of capital employed. VCI (Value Creation Index) shows how efficient has the company been in doing this.
Value Creation Index: Colour Rating Guide
  • >0.25 : Very Good
  • 0 to 0.25 : Somewhat Good
  • <0: Not Good
 Mar'04Mar'05Mar'06Mar'07Mar'08Mar'09Mar'10Mar'11Mar'12Mar'13
Return on Capital Employed
The return on capital employed gives a sense of how well a company is using its money to generate returns.
15.84%16.84%23.73%29.37%29.49%26.16%29.33%32.88%30.54%22.88%
Value Creation Index
The difference between ROCE and WACC as a Proportion of WACC reveals the extent of value created by a company.
Ie. (ROCE-WACC)/WACC
ROCE is Return on Capital Employed
WACC is Weighted Average Cost of Capital
0.840.240.600.900.960.951.361.381.11NA
Growth Parameters Growth Parameters help gauge a company's growth in the past 10 years. A value creating company needs to grow at a sustainable pace to continue creating value.
For Net Sales and EPS Growth Rate
  • >12% : Very Good
  • 8% to 12% : Somewhat Good
  • <8% : Not Good
For Debt To CFO
  • 0 to <1.5 : Very Good
  • 1.5 to <3 : Somewhat Good
  • >3 or <0: Not Good
Net Sales (Rs. Cr.)
Net Sales is calculated by deducting excise duty, sales tax and other such deductible indirect taxes from the gross sales of a company.
8,1199,71313,50417,42019,58926,65833,26042,03747,73148,118
Y-o-Y Gr. Rt.-19.6%39%29%12.5%36.1%24.8%26.4%13.5%0.8%
Adjusted EPS (Rs.)
Adjusted Earning per Share is the company’s net profit per share after adjusting for extra-ordinary/exceptional items
3.444.036.839.9211.812.7217.3624.2628.4726.52
Y-o-Y Gr. Rt.-17.2%69.5%45.2%19%7.8%36.5%39.8%17.4%-6.9%
Book Value per Share (Rs.)
The total value that a company will fetch upon liquidation (if it is closed down), after settling all obligations is called its Book Value. Book value of a company includes only tangible assets. Book value allocated to each outstanding share is called Book Value per share
21.5624.6229.8335.9144.0252.8665.0382.34103.67124.38
Adjusted Net Profit Adjusted Net Profit is a measure of company's profitability after accounting for all costs and adjusting for one time events. 8439871,6712,4282,8873,1124,2495,9386,9686,491
Net Op. Cash Flow (Rs. Cr.)
This refers to the amount of cash a company generates from the revenues less operating expenses.
1,6968181,6242,8213,4783,2911,5852,659-8141,865
Debt to Cash Flow from Ops
Debt to CFO (Cash Flow from Operations) conveys the number of years it will take for a company to repay its debt, given the cash generated from operations.
CFO: It is the amount of cash generated by the company through its core business operations without looking at the impact of its capital structure. It indicates whether the company is able to generate sufficient cash from its operations to maintain and run its operations.
0.320.660.340.030.030.050.080.06-0.230.8
CAGR
The Growth rate helps you understand how the company has performed over different time frames.
CAGR Colour Code Guide
CAGR Colour Code Guide
  • >12% : Very Good
  • 8% to 12% : Somewhat Good
  • <8% : Not Good
  9 yrs 5 yrs 3 yrs 1 yr
Net Sales
Net Sales is calculated by deducting excise duty, sales tax and other such deductible indirect taxes from the gross sales of a company.
21.9%19.7%13.1%0.8%
Adjusted EPS
Adjusted Earning per Share is the Company’s net profit per share after adjusting for extra-ordinary/exceptional items.
25.5%17.6%15.2%-6.9%
Book Value per Share
The total value that a company will fetch upon liquidation (if it is closed down), after settling all obligations is called its Book Value. Book value of a company includes only tangible assets. Book value allocated to each outstanding share is called Book Value per share
21.523.124.120
Key Financial Parameter The key financial ratios show the growth and sustainability of the Value Creation Index.
Performance Ratios: Colour Rating Guide
  • >12% : Very Good
  • 8% to 12% : Somewhat Good
  • <8% : Not Good
Debt to Equity Colour Rating Guide
  • 0 to 1 : Very Good
  • >1 to 2 : Somewhat Good
  • >2 or <0: Not Good
Return on Equity (%)
Return on Equity shows the amount of net profit generated as a percentage of shareholders equity. 
ROE measures a company's profitability over the money shareholders have invested. 
16.6917.4425.0730.1829.5226.2529.4532.9330.6123.26
Operating Profit Margin (%)
Operating Profit Margin shows how much profit a company makes (before interest payment and taxes) on sales. It is advisable to look at the change in a company’s operating margin over time and compare the company's yearly or quarterly numbers to those of its competitors.
16.0314.1316.9218.0416.3113.0210.0518.3518.9916.39
Net Profit Margin (%)
NPM (Net Profit Margin) is the ratio of profit, net of taxes and interests to sales. It is advisable to look at changes in a company’s NPM over time and to compare them with the competitor’s NPM.
10.3810.1612.3713.9414.7411.6812.7814.1314.613.49
Debt to Equity
This ratio indicates the ratio of equity to debt the company employs to finance its operating assets.
0.10.090.080.010.010.010.010.010.010.05
Working Capital Days
This is the number of days that a company will take to convert its working capital into revenue.
335347320312354359366329376453
Cash Conversion Cycle
Cash Conversion Cycle is a company's net working capital (creditors, debtors and inventory) expressed in terms of days
161176160151168176195159167196
Management Assessment
Management Assessment
An assessment of the trustworthiness of the management based on 5 important parameters. These parameters are colour coded as
Green (Very Good), Orange (Somewhat Good) and Red (Not Good)
What do we look at?
Management Assessment: An assessment of the trustworthiness of the management based
on 5 important parameters. These parameters are colour coded as Green (Very Good),
Orange (Somewhat Good) and Red (Not Good)
Corporate Governance
Corporate Governance
This refers to a set of processes or laws that affects the way a company is directed and controlled.
Board Credentials
Board credentials
This refers to the skill sets (qualification, experience, etc.) that the management team of a company possesses.
Promoter's holding
Promoter's holding
This refers to the stake that the promoters hold in a company and proportion of shares pledged.
Transparency
Transparency
Transparency refers to the practices that a company follows in the disclosure of important and necessary information.
Integrity
Integrity
Integrity refers to the application of honest and fair business practices.

Percentage Holding
63.06%
32.52%
4.42%

Pledged *0.000.000.000.000.000.000.000.000.000.000.000.000.000.000.000.000.000.000.000.00
*  Pledged shares as % of Promoter's holding (%)

BHEL has performed extremely well in the past ten years, except in FY 03. The company has increased its Net Sales by 22% CAGR in the last ten years; however the EPS increased by 28% during the same period. This was due to the margin expansion that the company witnessed from FY 04 to FY 08. India’s increased focus on infrastructure and the monopoly situation enjoyed by the company made this possible. FY 09 and FY 10 again saw a decrease in margins on the b ... Read more

BHEL has performed extremely well in the past ten years, except in FY 03. The company has increased its Net Sales by 22% CAGR in the last ten years; however the EPS increased by 28% during the same period. This was due to the margin expansion that the company witnessed from FY 04 to FY 08. India’s increased focus on infrastructure and the monopoly situation enjoyed by the company made this possible. FY 09 and FY 10 again saw a decrease in margins on the back of increasing raw material prices. The company’s margins have increased substantially to 18% in FY 11 as raw material prices dipped. The company has grown its BVPS by 19% 10 yr. CAGR. Given the huge revenues and profitability enjoyed by the company, it has managed to increase its operating cash flow by 14.3% over the last 10 years. Hence, the Company has expanded its business successfully in the past. Currently, the Company has Debt to Net Profit ratio of 0.03, which shows the company is a relatively debt free company & can repay all its debt easily within a year at current level of profit.

BHEL has maintained a high ROE & ROCE, above 25%, over the last 5 years. This shows that the management of the Company is very efficient in utilizing the funds. Being a capital intensive industry, the company has huge working capital requirements. The company has managed to maintain its working capital days at an average of 514 days. However, this is 1.5 times higher than the industry average of 360 days. The company has managed to reduce its net working capital from 180 levels to 107 in FY 11, which is lower than the industry average of 180 days but very high when compared to its competitors like ABB and Siemens.

All the above factors say that the 10 Year X-Ray of BHEL is Green (Very Good).

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