Bajaj Electricals Q1 Results Review - Soft Quarter Amid Weak Demand; Downgrade To 'Neutral': Yes Securities

Yes Securities Report

Bajaj Electricals Ltd.'s consumer products business registered low single digit growth of 2% on account of muted demand environment and unseasonal rains impacting summer products, while appliances saw growth of 10%.

Ebitda margins at 6.1% was lower as operating leverage has not kicked in and staff cost saw increase on back of enhancement in research and development team in lighting vertical.

Engineering, procurement and construction business has started generating profits and it is expected to see further improvement going forward. Order book in EPC remains healthy.

Bajaj Electricals is now focusing in its Nirlep brand, and it is expected to launch slew of products from first half of September ahead of festive season.

Bajaj Electricals has done soft launch of its Nex brands which will house its premium fans and the commercial launch will be towards the next summer season.

Considering Bajaj Electricals spending on its R&D initiatives and spends on two of its brands Nirlep and Nex in the current fiscal we have moderated our margin estimates in FY24 and expect the company to deliver double digit exit margin in FY25.

We now downgrade the stock to 'Neutral' with target price of Rs 1257 as the stock is fairly d at the current juncture and would wait for better entry point into the stock.

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