Bajaj Electricals Ltd. share price target

Though we are positive on BEL's CD business (with revenue CAGR of ~19% in FY19-21E) led by expansion in dealer network, lumpiness of EPC business would dent overall profitability of BEL with high debt level. We believe the poor performance of the EPC business and higher interest cost would overshadow the profitability of CD business. On an SOTP basis, we cut our multiples owing to flattish growth for the company and value BEL's CD segment at MCap of 1.1x FY21E sales (~55% discount to peers) and E&P; segment at 4x FY21E EV/EBITDA. We revise our rating downward from...

Consumer Segment Upholds Growth: Bajaj posted a revenue growth of 10.4% YoY backed by a very strong growth of 15%in consumer products segment.

BEL's CD business recorded revenue growth of ~15%, 23% in Q4FY19, FY19, respectively, due to low base and increased reach post completion of RREP. This is largely driven by strong performance in the appliances category that grew ~22%, 30% YoY in Q4FY19, FY19, respectively, followed by the fan business, which grew 19%, 26% YoY, respectively. We model CD segment revenue CAGR of 17% in FY19-21E vs. management guidance of ~24%. However, EPC segment revenue growth at 7%, 58% YoY in Q4FY19, FY19, respectively, was due to execution of large ECP project in UP. The EPC...

We visited Bajaj Electricals (BJE) distributors and retailers in South & West markets to understand the success of its new distribution program. The network now covers 200k retailers across 350 districts. BJE should cover 250k retailers by March 2020. We came out positive after visiting BJE's channel partners with following key takeaways: 1) the ROI at retailer level has increased, 2) premium category growing faster than the...

Bajaj Continues to Strengthen on RREP Model: BEL has posted a very good set of numbers backed by 26.7% YoY growth indurables segment and 157% YoY growth in EPC segment.

ICICI Securities Ltd | Retail Equity Research Bajaj Electricals recorded strong topline growth of ~89% YoY in Q3FY19 led by ~157% YoY growth in engineering & project (E&P;) division due to fast execution of EPC orders from Uttar Pradesh. Consumer durable (CD), which includes appliances and lighting business grew ~27% YoY led by ~40% YoY growth in appliances category. However, lighting segment sales were muted owing to continued pricing pressure in the LED segment. Within the...

Banking on a Very Strong Distribution Channel: The revenues came in at Rs. 1598 mn growing by 70.9% YoY beating our expectations. Both the segments have performed strongly to drive growth. EPC has posted a strong growth of 126.9% YoY majorly driving the huge revenue growth.

BJE's consumer business sales volume increased 25% YoY in 2QFY19. We are confident about 20% revenue growth for next 2 years as the new distribution model is stabilizing quickly. Please refer to Chart 1.0 on Page 3 for consumer business quarterly growth trajectory. The recently acquired Nirlep will add revenue of Rs500m in 2H. The margin in consumer business declined slightly in 2Q due to high RM costs. However this will reverse as...

Revenues came in at | 1598.4 crore, up by 71% YoY (vs. I-direct estimate: ~| 1107.7 crore) during Q2FY19 aided by 126.9% growth in the engineering & project segment led by fast execution of EPC orders from UP. Sales from consumer durables (CD) business witnessed growth of 24.9% supported by strong pre-festive demand. Within the consumer durable segment, lighting, appliances & fan witnessed growth of 17.4%, 30.5% & 35%, respectively Operating profit margins increased 40 bps YoY to 5.0%. Segment...

The management said that both business are performing as per expectations with consumer business taking lead in revenue/earnings growth. BJE has completed implementation of new distribution model in 90% of its territories and now covers 170k retailers. This would rise to 200k by Mar-19. We forecast overall recurring earnings to rise at 27% CAGR FY18-20E. Stock is available...