Bajaj Electricals Ltd. share price target

We downward revise our FY27/28 earnings estimate by 17%/11% with contraction in volume and margin due to increase in commodity prices, and downgrade the rating to Accumulate'. Consumer Products (CP) segment declined 25.2% YoY, driven by de-growth across categories due to channel stock normalization; water heaters, however, reported flattish growth. GP margin contracted by 80bps YoY, due to lower volume across high-margin categories and CP EBIT margin contracted due to lower volumes and operating...

Lighting was flat in Q4FY25 with single digit growth in Consumer lighting offset by degrowth in professional lighting. CP segment grew 8.4% YoY (accounted for 79% revenue), with strong growth across all products segment except fans which grew in low single digits in Q4FY25. Expansion in CP EBIT margin was supported by volume growth as well as gross margin expansion. Lighting revenue was flat, impacted by a decline in the professional lighting due to delays in order execution. BJE has...

Bajaj Electricals (BJE) reported a strong revival in consumer products in Q3FY25. There was healthy demand for most of its products despite the 2-4% price hike.

Bajaj Electricals reported revenue growth of 3.8% YoY after seven quarters of revenue decline YoY. However, EBITDA and PAT declined 2.1%, 25.1%, respectively, YoY.

While Bajaj Electricals reported weaker Q1FY24 than peers and our expectations, we note, (1) the EPC business is likely to be demerged very soon (3-4 months) and Bajaj Electricals has repaid the debt and has net cash balance sheet. Hence, it can leverage the cash flows to grow the consumer business in FY24-25, (2) it plans to invest in Nex (new brand) and Nirlep (relaunch).

Bajaj plans to focus on (1) launching differentiated and premium products, (2) leveraging the distribution network and improving throughput per store, (3) investing more in branding instead of trade discounts as higher ad-spend is likely strengthen in the brands in long term and (4) strengthening Nirlep and Morphy Richards brands too.

Bajaj’s Q3FY23 numbers appear healthy with revenue and PAT growth of 12.5% and 5.7% YoY, respectively. However, we note (1) sales of entire inventory of non- star rates fans has resulted in 63.9% revenue growth for fans segment.

As the value-for-money segment witnessed subdued demand due to high inflation, Bajaj Electricals reported revenue decline of 5.9% YoY in Q2FY23. The company reported lower revenue YoY across segments.

Bajaj Electricals (Bajaj Ele) might face revenue growth pressures in the remaining period of FY23E.

Bajaj Electricals has reported strong revenue growth of 43.4% YoY despite weakness in consumer demand in rural markets.