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Bajaj Electricals (BEL) posted strong top-line growth of 19.2% yoy to `701cr
(`588cr) in 2QFY2012. The company’s OPM fell by mere 9bp yoy to 7.5%
(7.6%). PAT for the quarter came in at `25cr (`23cr), up 7.6% yoy.
We recommend a Neutral rating on the stock.
Top-line growth driven by the lighting and consumer durables segments: During
the quarter, BEL’s sales grew by 19.2% yoy due to strong performance by the
lighting and consumer durables segments, which grew by 25.0% and 21.3%,
respectively, while the E&P segment grew by 9.5% yoy. The E&P segment reported
profit of `6.5cr vs. loss of `7.6cr in 1QFY2012, showing signs of a turnaround.
Despite flat OPM, the company’s PAT margin declined by 39bp yoy to 3.6%
(4.0%), owing to higher interest cost, which increased by 68.7% yoy `13cr. Going
ahead, the company’s margins are expected to remain under pressure on the
back of high commodity prices.
Outlook and valuation: We expect the trend of strong top-line growth to continue
going ahead as well. Overall, we expect the company to post a top-line CAGR of
20.4% over FY2011-13E. However, the company has been reporting depressed
OPM, owing to which we have revised our OPM estimates for FY2012 and
FY2013 downwards. We expect PAT to register a CAGR of 18.4% to `182cr over
FY2011-13E. At the CMP of `199, the stock is trading at 14.2x and 10.9x its
FY2012E and FY2013E EPS, respectively, factoring in most of the positives.
Thus, we recommend a Neutral rating on the stock.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Bajaj Electricals (BEL) posted strong top-line growth of 19.2% yoy to `701cr
(`588cr) in 2QFY2012. The company’s OPM fell by mere 9bp yoy to 7.5%
(7.6%). PAT for the quarter came in at `25cr (`23cr), up 7.6% yoy.
We recommend a Neutral rating on the stock.
Top-line growth driven by the lighting and consumer durables segments: During
the quarter, BEL’s sales grew by 19.2% yoy due to strong performance by the
lighting and consumer durables segments, which grew by 25.0% and 21.3%,
respectively, while the E&P segment grew by 9.5% yoy. The E&P segment reported
profit of `6.5cr vs. loss of `7.6cr in 1QFY2012, showing signs of a turnaround.
Despite flat OPM, the company’s PAT margin declined by 39bp yoy to 3.6%
(4.0%), owing to higher interest cost, which increased by 68.7% yoy `13cr. Going
ahead, the company’s margins are expected to remain under pressure on the
back of high commodity prices.
Outlook and valuation: We expect the trend of strong top-line growth to continue
going ahead as well. Overall, we expect the company to post a top-line CAGR of
20.4% over FY2011-13E. However, the company has been reporting depressed
OPM, owing to which we have revised our OPM estimates for FY2012 and
FY2013 downwards. We expect PAT to register a CAGR of 18.4% to `182cr over
FY2011-13E. At the CMP of `199, the stock is trading at 14.2x and 10.9x its
FY2012E and FY2013E EPS, respectively, factoring in most of the positives.
Thus, we recommend a Neutral rating on the stock.
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