Prabhudas Lilladher has given Hold recommendation for Bajaj Electricals with a target price of Rs. 1084 in its research report issued on May 25, 2021
Prabhudas Lilladher’s research report on Bajaj Electricals
We change our FY22/23 earnings estimates by -9.4%/ 3% given 1) demand momentum stalled by Covid-19 second wave and 2) commodity inflation led margin pressures. However, we expect smart recovery from 2H22 backed by 1) sustenance of demand upsurge post pandemic for kitchen appliances and fans 2) increase shelf space by leveraging industry leading distribution network & brand strength 3) CP margin expansion and 4) ever improving balance sheet aided by robust cash flow generation. In EPC, with second wave dampening efforts, management expects to achieve operational profitability by 3QFY22 (earlier 2QFY22).
We value the stock on SOTP and arrive at a target price of Rs1,084 (derived P/E of 35.4x on FY23 EPS, Consumer business valued at 37x). Downgrade to HOLD on rich valuations.