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India Equity Research Reports, IPO and Stock News
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�� Q1FY12 was an aberration; FY12E remains positive: BEL reported a
poor performance in Q1FY12 due to the consumer business facing
poor market conditions for fan and room cooler (reported a moderate
growth of 15.5%) and E&P (Engineering & Projects) business
showcased just a meager 2.5% growth coupled with loss on account of
increased cost incurred to close down the lingering projects. BEL
prices corrected by 14% since Q1FY12 result. We expect BEL
performance to improve in Q2FY12E and bounce back to normal level
in second half of FY12E on the account of better performance by E&P
business and normal growth in consumer durable business.
�� Introduction of new products at various price points: Backed by its
R&D efforts and global collaborations, the company has been able to
launch newer products across various price points/segments. With
aggressive marketing, strong distribution network and strong brand
equity, various launches of new categories in last 1 – 2 years will start
contributing substantially from current year.
�� Well Diversified product portfolio; presence at all price point: Over
the past seven decades, BEL has established strong presence in ‘value
for money’ segment of consumer durable products. To strengthen its
product portfolio, BEL strategically entered the premium segment
through tie‐ups with global premium brands. BEL also launched its
own brand “Bajaj Platini” to bridge the gap between the value and
premium brands.
�� Nationwide distribution network with wide urban and retail
penetration: We believe that consumer durables market is highly
fragmented with stiff competition from regional and national players.
Thus, to beat the competition BEL has created a strong presence in
pan India with network of 19 branch offices besides being supported
by a chain of about 1000 distributors, 4000 authorized dealers, over
4,00,000 retail outlets and over 282 Customer Care centers.
Valuation & Recommendation
At CMP of Rs. 186, the stock is trading at a PE of 11.3x in FY12E and 9.4x in
FY13E whereas on EV/EBITDA it is trading at 5.8x and 4.8x in FY12E and
FY13E respectively. We recommend to “BUY” the stock with a target
price of Rs. 238 per share (12x on FY13E EPS), an upside of 28% for a long
term view.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
�� Q1FY12 was an aberration; FY12E remains positive: BEL reported a
poor performance in Q1FY12 due to the consumer business facing
poor market conditions for fan and room cooler (reported a moderate
growth of 15.5%) and E&P (Engineering & Projects) business
showcased just a meager 2.5% growth coupled with loss on account of
increased cost incurred to close down the lingering projects. BEL
prices corrected by 14% since Q1FY12 result. We expect BEL
performance to improve in Q2FY12E and bounce back to normal level
in second half of FY12E on the account of better performance by E&P
business and normal growth in consumer durable business.
�� Introduction of new products at various price points: Backed by its
R&D efforts and global collaborations, the company has been able to
launch newer products across various price points/segments. With
aggressive marketing, strong distribution network and strong brand
equity, various launches of new categories in last 1 – 2 years will start
contributing substantially from current year.
�� Well Diversified product portfolio; presence at all price point: Over
the past seven decades, BEL has established strong presence in ‘value
for money’ segment of consumer durable products. To strengthen its
product portfolio, BEL strategically entered the premium segment
through tie‐ups with global premium brands. BEL also launched its
own brand “Bajaj Platini” to bridge the gap between the value and
premium brands.
�� Nationwide distribution network with wide urban and retail
penetration: We believe that consumer durables market is highly
fragmented with stiff competition from regional and national players.
Thus, to beat the competition BEL has created a strong presence in
pan India with network of 19 branch offices besides being supported
by a chain of about 1000 distributors, 4000 authorized dealers, over
4,00,000 retail outlets and over 282 Customer Care centers.
Valuation & Recommendation
At CMP of Rs. 186, the stock is trading at a PE of 11.3x in FY12E and 9.4x in
FY13E whereas on EV/EBITDA it is trading at 5.8x and 4.8x in FY12E and
FY13E respectively. We recommend to “BUY” the stock with a target
price of Rs. 238 per share (12x on FY13E EPS), an upside of 28% for a long
term view.
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