ICICI Direct has given Buy recommendation for Bajaj Electricals with a target price of Rs. 1075 in its research report issued on Feb 06, 2021
ICICI Direct’s research report on Bajaj Electricals
Bajaj Electricals (BEL) reported a strong set of Q3FY21 numbers beating our estimates on the profitability front. Strong demand in consumer products (CP) was fuelled by the festive season, market share gains and opening up of metros driving segment sales up 34% YoY. Product wise, appliances, fan, lighting and Morphy Richard category sales were up 36%, 22%, 18% and 69%, respectively. The segment margins improved sharply by ~464 bps YoY to ~12% supported by better gross margin and various cost optimisation measures (lower logistics costs and other overheads) during the pandemic. The management has reiterated continuous investment in the CP segment to increase products offerings, brand building activities and increasing reach. This would help the company to achieve double digit revenue growth, going forward along with improved segment margin profile. On the project front, the focus remained on minimising losses. Hence, despite 18% YoY reduction in segment revenue, the company saw a substantial decline in segment losses. In 9MFY21, the company generated ~Rs 609 crore cash flow from operations (Rs 142 crore in Q3FY21). A substantial portion of this has been used to reduce debt, which was at ~ Rs 441 crore now.
We maintain our BUY stance on the stock with a revised target price of Rs 1075 (earlier TP Rs 585).
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