BHEL share price

Return on equity or ROE is an important factor to be considered by a shareholder because it tells them how effectively their capital is being reinvested. In ...

Additionally, Bharat Heavy Electricals has paid dividends over a period of at least ten years, which means that the company's management is determined to pay dividends even if it means little to no earnings growth. Wrapping up, we would proceed with caution with this company and one way of doing that would be to look at the risk profile of the business. Alternatively, email editorial-team (at) simplywallst.com. In spite of a normal three-year median payout ratio of 31% (that is, a retention ratio of 69%), the fact that Bharat Heavy Electricals' earnings have shrunk is quite puzzling. It’s important for an investor to know whether the market has priced in the company's expected earnings growth (or decline). The basis for attaching value to a company is, to a great extent, tied to its earnings growth. Another way to think of that is that for every ₹1 worth of equity, the company was able to earn ₹0.03 in profit. Even when compared to the industry average of 10%, the ROE figure is pretty disappointing. Depending on how much of these profits the company reinvests or "retains", and how effectively it does so, we are then able to assess a company’s earnings growth potential. As you can see, Bharat Heavy Electricals' ROE looks pretty weak. Return on equity or ROE is an important factor to be considered by a shareholder because it tells them how effectively their capital is being reinvested. In this article, we decided to focus on