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Bajaj Electricals Ltd Research Report - 16th Aug 2016

Consumer Durables | Published on Aug 16th 2016

IT

For 1QFY2017, Bajaj Electricals (BEL)’ top-line and bottom-line have come in below our estimates. The top-line growth was dampened by the poor performance of the Consumer durables and E&P segments. However, on the bottom-line front, the company reported a modest growth due to slight improvement in the operating performance and lower interest cost, depreciation cost and taxes. Top-line de-grew 5% yoy: The top-line de-grew by ~5% YoY to Rs952cr (below our estimate of Rs1,188cr), mainly due to de-growth of 8% YoY in the Consumer Durables segment to Rs548cr and lower growth of ~1% YoY in the E&P segment to Rs414cr. Despite revenue de-growth, PAT grew ~12%: On the operating front, the company reported a mild margin improvement (OPM up by 37bp YoY to 5.9%), primarily on account of lower raw material costs during the quarter. The reported net profit grew by ~12% YoY to Rs22cr, again underperforming our estimate of Rs27cr, on account of lower sales growth. Outlook and valuation: On 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 ~12% to Rs5,805cr and bottom-line to grow at a CAGR of 24% to Rs147cr over FY2016-FY2018E. We retain our Accumulate rating on the stock with a revised target price of Rs277.

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Accumulate

CMP 245
Target Price 277
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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