Bhel was bound to decline on Thursday, and so it did, after results showed net profit growth was awfully below expectations.

The scrip of the power equipment major slipped 3.74% to Rs 181.55 by 10:35 IST. Relatively high volumes of over 266,000 Bhel shares were recorded on BSE till then. Yesterday, ahead of the results, the scrip subsided 2.55% to Rs 188.60.

This came in contrast to the fortunes over the 14 prior sessions (between 7 and 28 January 2003) when Bhel climbed 14.5% from Rs 164.70 to Rs 193.55.

Late Wednesday, Bhel showed third quarter ended 31 December 2002 net profit grew a mere 1.5% Rs 81.33 crore compared to Rs 80.15 crore in the corresponding period of the previous year. Total income increased by 14% to Rs 1,699.76 crore (Rs 16.99 billion) from Rs 1,490.17 crore (Rs 14.9 billion) in DQ 2001.

Analysts were expecting a solid (according to a capitalmarket.com poll of four analysts) net profit growth of 44-76% to Rs 115.5-144 crore (Rs 1.15 billion) on sales of Rs 1,806.5-2,012 crore (Rs 18.06-20.12 billion).

Analysts now comment in retrospect that order realisations did not pick up in the quarter under review, despite the huge order book. . However, they are optimistic that the company will do well in the next quarter (ending 31 March 2003), which has traditionally been a strong quarter for Bhel. The company's net growth in the fourth quarter ended 31 March 2002 was much higher than the net profit in the nine preceding months.

The scrip had earlier proved upbeat on hopes that the company would put forth an improved performance following its strong order book position. Bhel's order book stood at Rs 13,500 crore (Rs 135 billion) as at end September 2002.

Meanwhile, analysts are hopeful that the introduction of the Electricity Bill will further benefit the company. The proposed legislation in the Electricity Bill seeks to do away with the current restrictions on power generators and reform the sector.

Bhel is the largest engineering and manufacturing enterprise of its kind in India, and is one of the leading international companies in the field of power equipment manufacture. The Centre has decided to sell 17% equity stake in Bhel to bring down its holding in the company to 51% from 67.7%. The heavy industry ministry has granted its concurrence to the proposal for divesting 17% stake to the public, financial institutions and employees.