India’s state-owned Bharat Heavy Electricals Ltd (BHEL) reported a 25% fall in fourth-quarter profit to 4.84 billion rupees (about $58 million), as higher expenses outpaced soaring domestic demand for power and industrial products.
The company, which makes power and industrial equipment, had reported three straight quarters of losses until the December quarter. Its total expenses rose more than 5% to 77.94 billion rupees, outweighing a 1% increase in income from operations.
The rise in income from operations was driven by heightened temperatures in the quarter, which helped domestic electricity generation grow at an average of about 8% annually, following the pandemic year of 2020/21. BHEL accounts for 53% of the country’s total installed power generation capacity, according to government data.
Additionally, industrial activity in the country also soared on higher government spending ahead of the ongoing national elections. In contrast, rival companies like Tata Power and Siemens reported a rise in fourth-quarter profit on strong demand.
The decline in BHEL’s profit despite the favorable market conditions suggests that the company’s higher expenses, which outpaced the rise in income, weighed on its financial performance during the quarter. The company’s ability to manage costs and capitalize on the growing domestic demand for power and industrial products will be crucial going forward.