Bharat Heavy Electricals Ltd. (BHEL), India’s biggest maker of power-plant equipment, said second- quarter profit declined 10 percent because of a drop in earnings at its industry division.
Net income dropped to 12.7 billion rupees ($235 million) in the three months ended Sept. 30 from 14.1 billion rupees a year earlier, the company said today in a statement. The median profit of 33 analyst estimates in a Bloomberg survey was 13.6 billion rupees. Sales were little changed at 104 billion rupees.
The industry business, which accounts for almost a fifth of revenue and comprises railway locomotives and electricity transmission equipment, plunged 31 percent in the quarter. Sales from power-plant machinery gained 15 percent.
Bharat Heavy is seeking to expand its transportation business as competition from Chinese and South Korean companies erodes profit margins of its core business. The company, which had 1.22 trillion rupees of orders as of Sept. 30, is awaiting contracts from power plants that are facing a shortage of coal and natural gas to fire their boilers.
A lack of fuel and rising debt at power distributors is hindering Prime Minister Manmohan Singh’s plan to attract $256 billion of investment in the sector to reduce outages and aid economic growth.
Bharat Heavy declined as much as 5 percent to 230.25 rupees, the biggest intra-day drop since Oct. 5, and traded at 230.90 rupees as of 1:49 p.m. local time. The stock has fallen 3 percent this year, compared with a 20 percent gain in the benchmark Sensitive Index. (SENSEX)
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