BHEL Q2 FY23: Stable Revenue, Negative EBITDA, and a Big Order Backlog

Bharat Heavy Electricals Limited (BHEL) reported a steady top line in Q2 FY23, but operating profitability weakened. Revenue from operations came in at 5,203 crore compared with 5,112 crore in Q2 FY22. Turnover was broadly flat at 4,928 crore versus 4,911 crore.

The quarter’s key drawback was margins. EBITDA slipped into negative territory at -19 crore, down from 45 crore a year ago. Profit before tax stood at -201 crore versus -88 crore in Q2 FY22. Profit after tax was 10 crore, an improvement from a loss of 67 crore last year, but the underlying operating trend in the deck points to pressure rather than recovery.

Profitability was weak, and working capital stayed heavy

BHEL’s disclosures highlight that cash conversion remains a critical part of the story. Trade receivables reduced to 6,624 crore in Q2 FY23 from 7,220 crore in Q2 FY22. But contract assets increased to 27,094 crore from 23,939 crore, taking the combined total to 33,718 crore.

The company also disclosed the customer mix for these receivables and contract assets in Q2 FY23: central utilities accounted for 37.1%, state utilities 41.6%, private sector 14.4%, and exports 6.9%. The large share linked to utilities underlines why collection cycles and milestone certifications matter for reported cash flows.

Provision movements during the quarter showed creation of 238 crore, withdrawals of 378 crore, and write-offs of 21 crore, resulting in net provisions of -118 crore.

Order book remained the anchor, led by power

Where BHEL continues to show scale is its backlog. Total outstanding order book (including taxes) as on 30 September 2022 stood at 1,06,376 crore. The composition remained heavily tilted towards power, with 88,973 crore or 84% of the total. Industry accounted for 12,677 crore or 12%, and exports were 4,726 crore or 4%.

Orders received up to Q2 FY23 were disclosed at 14,511 crore in total. This included 11,174 crore in power, 3,155 crore in industry, and 183 crore in exports.

This mix explains BHEL’s operating priorities. A large backlog supports revenue visibility over multiple quarters, but profitability depends on project execution, timely billing, and how quickly contract assets convert into cash.

Delivery milestones across thermal, hydro, and solar

BHEL’s Q2 FY23 update emphasised execution progress. The company reported synchronization of Unit 1 of the 2x660 MW Maitree Super Thermal Power Project in Bangladesh on 15 August 2022. It also disclosed capacity addition of Unit 1 and Unit 2 of the 2x60 MW Vyasi UJVNL hydropower project.

On renewables, BHEL highlighted completion of commissioning of a 100 MW floating solar plant at NTPC Ramagundam in Telangana, described in the deck as India’s largest floating solar power plant. It also reported commissioning of the full 20 MW for the NTPC Gandhar solar photovoltaic project and synchronization of a 50 MW solar power project for MAHAGENCO at Koudgaon in Maharashtra.

These milestones matter because they indicate movement from order book to physical completion, which is typically linked to billing and revenue recognition.

Technology and new adjacencies: flexibilisation, defence electronics, and gasification

Beyond near-term execution, the deck includes a set of initiatives that signal where BHEL is trying to build capability.

In R&D and innovation, BHEL reported that it demonstrated indigenously developed flexible operation capability for a coal-based thermal plant at Adani Power’s 1x600 MW Avanta Raigarh plant. During trials, it achieved a ramp rate in excess of 3% per minute while keeping major parameters within stable limits. It also disclosed R&D achievements such as short circuit testing for a 144 MVA, 400 kV station transformer for the NTPC Patratu project, and the design and supply of a 16 pole 2,150 kW, 6.6 kV motor suitable for hazardous applications.

The company stated it spent over 264 crore on R&D activities up to September 2022 and reported an intellectual capital base of 5,163 patents and copyrights at the end of Q2 FY23.

On the defence side, BHEL highlighted its first-ever order for design, development and supply of a 30Ah lithium-ion battery for the Advanced Medium Combat Aircraft programme from Aeronautical Development Agency, Bengaluru. The deck states BHEL is to be the sole Indian supplier of lithium-ion batteries for next generation aircraft.

On the energy transition and industrial side, BHEL signed a strategic memorandum of understanding with Coal India Limited and NLC India Limited to set up coal gasification based plants. The MoUs include a coal-to-ammonium nitrate project with Coal India and a lignite-based gasification pilot plant with NLC India for power generation, using BHEL’s pressurised fluidised bed gasification technology.

Takeaways from the quarter

BHEL’s Q2 FY23 numbers show a business with stable revenue but pressured operating profitability. The more durable positives in the deck are the size of the order book and the breadth of execution milestones across thermal, hydro and solar projects.

At the same time, the scale of contract assets at 27,094 crore keeps working capital and cash conversion at the centre of the investment debate. Going forward, the value of the 1,06,376 crore backlog will depend on how efficiently projects are delivered and how consistently billing and collections follow execution.