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Some BHEL orders at risk due to 'Coalgate': Nomura

Source : REUTERS
Last Updated: Fri, Sep 07, 2012 08:57 hrs
A labourer loads coal onto a truck at a coal yard on the outskirts of Jammu

Nomura says about 28 percent of Bharat Heavy Electricals Ltd's order book is at risk of cancellation or deferment due to either non-availability of coal linkage or cancellation of existing linkage, following the coal allocation scam, popularly dubbed Coalgate.

"Coalgate" is a short-hand reference to the CAG report published on August 17 that questioned the government's practice of awarding coal mining concessions to companies without competitive bidding, potentially costing the treasury billions of dollars in lost revenues.

Nomura adds the coal allocation scam puts further risks to its FY13 earnings estimates for the company.

In another report, Macquarie said "BHEL is a value trap, stay clear" as in its worst-scenario analysis, BHEL's earnings can decline by 65 percent in FY15 from FY12 levels and the stock could move closer to 100 rupees.

At 1:15 p.m, shares in BHEL were up 1.5 percent at 204.20 rupees, after falling 8.1 percent in previous 2 sessions.

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