Bharat Heavy Electricals Ltd., India’s biggest maker of power-plant equipment, had a worse-than-expected 17 percent drop in third-quarter profit as funding delays prompted customers to hold back orders.
Net income fell to 11.8 billion rupees ($221 million) in the three months ended Dec. 31 from 14.3 billion rupees a year earlier, the company said today in a statement. The median of 34 analyst estimates compiled by Bloomberg was 13.5 billion rupees. Sales dropped almost 5 percent to 100.4 billion rupees.
Revenue from the power-generation equipment business, which accounts for more than 75 percent of Bharat Heavy’s sales, dropped almost 5 percent in the quarter. Sales from the industry business, comprising locomotives and power-transmission gear, fell 5.5 percent.
“Non-availability of land and difficulty in arranging equity funding by promoters delayed power plants from placing orders,” said Lakshminarayana Ganti, an analyst with Standard Chartered Securities India Ltd. in Mumbai. “To reinvigorate the power-generation sector, issues relating to coal prices, power-purchase agreements and the health of state distribution companies need to be addressed.”
Competition from overseas suppliers, including Shanghai Electric Group Co. and Dongfang Electric Corp., and higher capacity at local rivals led to a drop in power-equipment prices in India. New orders have slowed as lack of fuel supplies and environmental approvals are holding up new projects.
State-run Bharat Heavy had orders of 1.14 trillion rupees in the quarter, compared with 1.22 trillion rupees in the previous three months.
The shares plunged as much as 4.7 percent to 217.10 rupees, the biggest decline in three months. The stock has lost 11 percent in the past year, compared with a 15 percent increase in the benchmark Sensitive Index.