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Bajaj Electricals (BJE) suffered a setback as Mr. R Ramakrishnan,
Executive Director, resigned on February 20, 2012. He spent over 12 years
in the company and guided it through its restructuring over the past few
years, besides several international tie‐ups for its consumer business. Mr.
Shekhar Bajaj, CMD, indicated day‐to‐day operations will remain
unaffected as they are driven by six BU heads. He also indicated that he is
active in the company management and will continue to guide on
strategic matters. We maintain ‘BUY’ with target price of INR220.
Key management change, but business as usual
BJE’s ED, Mr. R Ramakrishnan, resigned yesterday. Having spent over 12 years with the
company, Mr. Ramakrishnan guided the company through its restructuring over the
past few years, including the several international tie ups. Mr. Bajaj during the concall
today indicated that Mr. Ramakrishnan’s exit is unlikely to affect the day‐to‐day
operations as they are headed by six BU heads independently as profit centres. Mr.
Bajaj further indicated that he continues to remain active in managing BJE and will
continue to take strategic decisions. He refused to give a timeline / roadmap towards
Mr. Ramakrishnan’s replacement, as it was too early to decide on the new structure.
Outlook and valuations: Remain positive; maintain ‘BUY’
While Mr. Ramakrishnan’s exit is certainly a setback given that this has been one of the
risks to the stock, we believe until more clarity emerges regarding his replacement /
roadmap ahead, it would be premature to conclude that it will have a significant
impact. In terms of business, we believe the E&P division continues to hold the key for
BJE’s valuation due to concerns over its lower order book/ inflows and margin profile.
We believe consumer businesses will continue to report strong growth as the company
launches new products and enters new segments amid increased competition. The
stock is currently trading at P/E of 13.6x and 9.3x FY12E and FY13E, respectively. We
maintain ‘BUY / Sector Outperformer’ with target price of INR220.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Bajaj Electricals (BJE) suffered a setback as Mr. R Ramakrishnan,
Executive Director, resigned on February 20, 2012. He spent over 12 years
in the company and guided it through its restructuring over the past few
years, besides several international tie‐ups for its consumer business. Mr.
Shekhar Bajaj, CMD, indicated day‐to‐day operations will remain
unaffected as they are driven by six BU heads. He also indicated that he is
active in the company management and will continue to guide on
strategic matters. We maintain ‘BUY’ with target price of INR220.
Key management change, but business as usual
BJE’s ED, Mr. R Ramakrishnan, resigned yesterday. Having spent over 12 years with the
company, Mr. Ramakrishnan guided the company through its restructuring over the
past few years, including the several international tie ups. Mr. Bajaj during the concall
today indicated that Mr. Ramakrishnan’s exit is unlikely to affect the day‐to‐day
operations as they are headed by six BU heads independently as profit centres. Mr.
Bajaj further indicated that he continues to remain active in managing BJE and will
continue to take strategic decisions. He refused to give a timeline / roadmap towards
Mr. Ramakrishnan’s replacement, as it was too early to decide on the new structure.
Outlook and valuations: Remain positive; maintain ‘BUY’
While Mr. Ramakrishnan’s exit is certainly a setback given that this has been one of the
risks to the stock, we believe until more clarity emerges regarding his replacement /
roadmap ahead, it would be premature to conclude that it will have a significant
impact. In terms of business, we believe the E&P division continues to hold the key for
BJE’s valuation due to concerns over its lower order book/ inflows and margin profile.
We believe consumer businesses will continue to report strong growth as the company
launches new products and enters new segments amid increased competition. The
stock is currently trading at P/E of 13.6x and 9.3x FY12E and FY13E, respectively. We
maintain ‘BUY / Sector Outperformer’ with target price of INR220.
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