BEML reported standalone sales of Rs621cr for 2QFY2016, up 37.7% yoy (ahead
of our expectation of Rs599cr). At the EBITDA level, the company reported losses
of Rs13cr, 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 Rs30cr, against
our loss expectation of Rs12cr. Notably, the quantum of loss has narrowed down
on a yoy basis.
BEML’s order book as of 2QFY2016 stands at ~Rs6,376cr, 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 Rs1,771cr 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 Rs2,900cr. 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.

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