Prabhudas Lilladher's research report on Bajaj Electricals
We have not made any changes to our estimates for FY23-24. BJE expects rural demand to recover after strong monsoon and onset of festive season. Margin in Consumer segment is also expected to recovery from Q3 onwards. It has shown continued balance sheet improvements as it has achieved net debt free status now. We believe market share gain in fans/lighting business is quite encouraging, thanks to new product introductions. We expect the company has the potential to scale up its newer product categories through continued distribution expansion. EPC business margin at 2% after making losses for a long time. We remain structurally positive on longer term prospects given 1) strong brand with leadership position in kitchen appliances 2) increasing shelf space by leveraging industry leading distribution network & brand strength and 3) improving balance sheet aided by robust cash flow generation. We estimate Sales/PAT to grow at CAGR of 15% / 49% over FY22-24E.
Outlook
We value the stock on SOTP & arrive at a target price of Rs1,211 (derived P/E of 35.5x on March’24 EPS, Consumer business valued at 40x (vs 36x before).
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