Bajaj Electricals Q1 Results Review - Soft Performance In Challenging Environment: Prabhudas Lilladher
Consumer product segment grew 2.7%, mainly with 10.1%/12.2% growth in appliances/Morphy Richards
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Prabhudas Lilladher Report
Bajaj Electricals Ltd. reported soft numbers with sales decline of 1.0% and profit after tax decline of 4.7% YoY on account of muted demand environment and unseasonal rains (impacting summer products).
The scheme of engineering, procurement and construction segment’s demerger has been approved by National Company Law Tribunal and accordingly the segment is discontinued.
Growth in consumer product mainly came from appliances segment (up 10.1% YoY) and contraction in margin was due to negative operating leverage and investment in growth, which will drive future growth.
Bajaj Electricals is expected to see improvement in business from Q3 FY24 with strong festive season and improvement in margin alongside growth, product mix and logistics cost saving.
We estimate FY23-25E revenue/Ebitda/profit after tax compound annual growth rate of 8.9%/16.2%/21.4%, excluding EPC segment. Our current estimates are not comparable to earlier estimates, as we have removed EPC business estimates in our future projection given the business demerger.
We value the stock at 37 times FY25 EPS (earlier on SOTP, consumer product business value at 35 times) and arrive at target price of Rs 1337 (earlier 1326). Maintain ‘Accumulate’ rating.
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