Add Bajaj Electricals, target price Rs 1300: ICICI Securities

ICICI Securities has add call on Bajaj Electricals with a target price of Rs 1300. The current market price of Bajaj Electricals Ltd. is Rs 1210.5. Time period given by analyst is one year when Bajaj Electricals Ltd. price can reach defined target.

Bajaj Electricals Ltd., incorporated in the year 1938, is a Mid Cap company (having a market cap of Rs 13835.97 Crore) operating in Consumer Durables sector.

Bajaj Electricals Ltd. key Products/Revenue Segments include Consumer Durables, Contract Revenue and Other Operating Revenue for the year ending 31-Mar-2021.


Financials
For the quarter ended 31-12-2021, the company reported a Consolidated Total Income of Rs 1337.45 Crore, up 1.08 % from last quarter Total Income of Rs 1323.19 Crore and down -12.16 % from last year same quarter Total Income of Rs 1522.57 Crore. Company reported net profit after tax of Rs 48.17 Crore in latest quarter.

Investment Rationale
With steady losses and high investments in working capital, Bajaj Electricals’ EPC business was EVA negative. While it does not ascribe any value to EPC business, it believes the divestment will be long-term value accretive for Consumer products segment as well as Bajaj Electricals. It believes the divestment will allow the company to increase its investment in brand-building activities, R&D and distribution expansion. It also believes consumer business is trading at EV/EBIT of ~33x FY24E assuming the current market cap is completely attributable to consumer business. While the Q3FY22 performance was affected by rural slowdown, higher input prices, change in revenue mix and higher base, it remains positive given the company’s market share gains in fans and kitchen aids.

Promoter/FII Holdings
Promoters held 62.85 per cent stake in the company as of 31-Dec-2021, while FIIs owned 11.8 per cent, DIIs 11.66 per cent.