>Bajaj Electricals Ltd- Q1FY13 Result Update

􀂉 In Q1FY13, Bajaj Electricals Ltd (BJE) has reported a revenue of `6661.9 Mn registering a growth of 22.4% on Y-o-Y basis but it has shown a substantial decline of 37% on sequential basis mainly on account of decline in lighting and engineering & project business. During the quarter, Consumer durable business has grown by 28.8% , lighting business has grown by 19.6% and engineering & project business by mere 8.4% compared to same quarter previous year.


􀂉 BJE’s EBITDA margins in Q1FY13 stood at 5.2%, which declined by 40 bps on Y-o-Y basis and by 290bps on Q-o-Q basis, mainly due to shrinking margin of Engineering & project segment. In Q1FY13, net profit margin of the company stood at mere 1.8% , registering a decline of 20bps on Y-o-Y basis, whereas it has declined by 280 bps on Q-o-Q basis. The decline in the margins is mainly attributed to operating losses in engineering & project business where the company is finding it difficult to close the ongoing projects and to control increasing capital employed.


􀂉 Consumer Durables business which contributed more than half (58.6%) of total revenue
in Q1FY13, has grown by 28.8% on Y-o-Y basis but declined sharply by 12% on sequential
basis. However the EBITDA margin for consumer durables had declined by 120 bps on Y-o-
Y basis to 8 4%. The decline in margins was due to fans segment which has pulled down the profitability performance largely on account of increasing commodity prices and due to
Forex losses on account of imported products. Under consumer durable business; appliances segment grown by 32%, Morphy Richards grown by 29% and fans segment
grown by 13% in Q1FY13 on Y-o-Y basis.


􀂉 Engineering & Project (E&P) business had a dull quarter with `70.5 mn operating loss.
Engineering & project business order book stands at `4500 mn as on QFY13 and is L1 in projects worth `7000 mn. The order book includes orders worth `2540 mn for Special projects, `1460 mn for TLT (Transmission Line Towers) and `6000 mn for High-mast. The company is trying to close various sites which were in-complete and hoping to close significant projects in coming quarters, the company has also mentioned that the next few quarters are going to be critical for E&P segment.


Valuation & Recommendation:

At CMP of `173.4/ share, BJE is currently trading at P/E Multiple of 10.3x on FY13E EPS of `16.8. We maintain “HOLD” on BJE with target price of `202/ share (12x P/E on FY13 EPS of `16.8)



RISH TRADER