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Bajaj Electricals Ltd Research Report - 01st Jun 2016

Consumer Durables | Published on Jun 01st 2016

IT

For 4QFY2016, Bajaj Electricals (BEL)’ top-line and bottom-line have come in below our estimates, owing to the poor performance of its Consumer durables business. The top-line growth was dampened by the poor performance of the Consumer durables and E&P segments. On the bottom-line front, the company reported a de-growth due to lower revenue growth, poor operating performance and higher taxes. Top-line grows ~3% yoy: The top-line for the quarter rose by a mere ~3% yoy to ~Rs1,357cr due to decline in the E&P and Consumer durables segments. The E&P segment de-grew by ~1.5% yoy to ~Rs486cr while the Consumer durables segment de-grew by ~0.4% yoy to ~Rs544cr. However, the Lighting segment reported a strong growth of ~18% yoy to Rs327cr which pulled up overall revenues and led the company to post a top-line growth for the quarter. Poor operating performance dragged the overall profitability: For the quarter, the company’s bottom-line declined by 26% yoy to ~Rs35cr (vs Rs47cr in 4QFY2015) owing to a poor operating performance (margin contraction of 34bp yoy) and higher taxes. Outlook and valuation: With expectation of timely execution of new projects in the E&P segment and with the Lighting and Consumer Durables segments expected to benefit from an improvement in consumer sentiments going forward, we expect the company’s top-line to grow at a CAGR of ~15% to Rs6,098cr and bottom-line to grow at CAGR of 29% to Rs159cr over FY2016-FY2018E. We retain our Buy rating on the stock with a revised target price of Rs268.

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CMP 228
Target Price 268
Investment Period12 Months

Stock Info

MCAP BSE (Rs in Cr)2,230.45
MCAP NSE (Rs in Cr)2,227.42
P/E (x)21.55
EPS (Rs.)10.23
BV (Rs.)73.50
Div Yield (%)1.27
FV (Rs.)2.00
P/BV (x)3.00
EV/Sales (x)0.54
EV/EBITDA (x)11.01

Shareholding Pattern (%)

Promoter64.0
Public & Others16.0
Foreign9.0
Institution8.0
Corporate3.0
Grand Total100.0

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