Bajaj Electricals has been on right path with more focus on preimmunizing its portfolio and launching more products at the premium end, however it is time consuming, and company will have to continue with high brand spends which will make margin expansion a tall task.
NDTV Profit’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages, asset managers and research agencies. These reports offer NDTV Profit’s subscribers an opportunity to expand their understanding of companies, sectors and the economy.
Yes Securities Report
Bajaj Electricals Ltd.’s consumer products business registered revenue de-growth of 10.8%. Revenue de-growth is largely on account of lower demand for summer products. Air-coolers and Fans has registered strong double digit de-growth impacting overall revenue.
Non-seasonal products like water heater and other kitchen appliances have registered double digit growth. Negative operating leverage has resulted in Ebit loss in consumer products. Management believes that decline in Q1 is on back of weather related and is unlikely to continue in ensuing quarters.
Lighting on the other hand has registered growth despite price erosion. Improved product mix and new product launches has resulted in double digit margin for lighting segment Management is targeting 6% margin for consumer products, which we believe will be tall as given higher A&P spends.
We have built in 140bps Ebitda margin expansion to7.8 % by FY27. We now assume 11% revenue CAGR FY25-27 vs earlier estimate of 9% revenue CAGR considering healthy order-book in professional lighting, company share of premium product inching up and launch of Switchgear.
We estimate FY25-27 Ebitda and PAT CAGR of 23% and 31% respectively.
We upgrade the stock to Add as we foresee margin expansion and stock price has seen sharp correction in previous couple of months. Bajaj Electricals has been on right path with more focus on preimmunizing its portfolio and launching more products at the premium end, however it is time consuming, and company will have to continue with high brand spends which will make margin expansion a tall task.
Bajaj Electricals will have to navigate the challenges on the kitchen appliances side which is facing demand challenge and pressure from smaller regional players.
Click on the attachment to read the full report:
DISCLAIMER
This report is authored by an external party. NDTV Profit does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of NDTV Profit.
Users have no license to copy, modify, or distribute the content without permission of the Original Owner.
. Read more on Research Reports by NDTV Profit.