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Bajaj Electricals has reported a dismal performance where the EBIDTA margin was down by 230bps YoY to 8.1% in Q4FY12 as against 10.4% in Q4FY11 led by the slump in Engineer & Project division (E&P) which reported a decline in margins by 490bps YoY to the tune of 5.6% in Q4FY12. The company reported a jump in net revenue by 8.1% YoY and by 33.5% QoQ to Rs. 1058.64 crores. The margin in the Lighting division increased by 240bps YoY to 10.4% and up by 480bps QoQ basis. The company reported a PAT of Rs. 48.99 crores in Q4FY12; a decline of 14.7% YoY and a jump of 49.3% QoQ.
Key Highlights:
The EBIT margin in the consumer durable was down by 180bps YoY at 9.5% and down by 160bps QoQ. The margin was impacted due to the EBIT margin of fan and air-cooler declined due to the extended winter season which has resulted into the high inventory. The lighting division reported an increase in EBIT margin by 480bps QoQ and up by 240bps YoY at 10.4% in Q4FY12.
E&P business has a current order book of Rs. 610 crores declining 19% YoY on weaker inflows from Rs 690 crores. Transmission line tower/Highmasts/ Special projects accounted for 30%/21%/49% of the order book. Bajaj Electricals managed to close 18 sites during FY12. It plans to bring down the number of operational sites to 60 by FY13 end from 76 currently. E&P business register a slump in revenue growth by 2.1% YoY to Rs. 367.81 crores. Q4FY12 being a good quarter for E&P business saw a jump of 105.1% in revenue on QoQ basis. The EBIT margins improved on QoQ basis but declined on YoY basis to 5.6%.
The interest cost was up by 150% YoY to Rs. 16.31 crores further squeezed out the PAT margins at 4.6% in Q4FY12 as against 6% in Q4FY11 and 4.1% in Q3FY12.
Valuation & Recommendation
At CMP of Rs. 197, the stock is trading at a PE of 11.5x in FY13E. We feel that E&P business is the major concern for the company where, the delay in closure of old projects, delay in clearance of projects by the government and lower EBIT margin projects has resulted into the dismal quarter for the company for the straight four quarters. The management on the other hand sounds positive as the company has bid for projects having higher margins which in our view will improve the overall margins for the company going forward. Though we are bit cautious about the slow order intake and low margin in E&P division. We cut our earnings estimate for FY13E by 15% to reflect continuing cost pressure and delay in pick-up in order inflow in the E&P segment. We have initiated Bajaj Electricals at Rs. 186 on 22nd September 2011 with a target price of Rs. 238. The stock had hit a high of Rs. 234 on 22nd May 2012 thereby generating 25.8% return. We have already recommended investors to book profits at current levels in the morning extract on weaker E&P projects and uncertain demand condition. We have revised our target price of Rs. 178 per share FY13E.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Bajaj Electricals has reported a dismal performance where the EBIDTA margin was down by 230bps YoY to 8.1% in Q4FY12 as against 10.4% in Q4FY11 led by the slump in Engineer & Project division (E&P) which reported a decline in margins by 490bps YoY to the tune of 5.6% in Q4FY12. The company reported a jump in net revenue by 8.1% YoY and by 33.5% QoQ to Rs. 1058.64 crores. The margin in the Lighting division increased by 240bps YoY to 10.4% and up by 480bps QoQ basis. The company reported a PAT of Rs. 48.99 crores in Q4FY12; a decline of 14.7% YoY and a jump of 49.3% QoQ.
Key Highlights:
The EBIT margin in the consumer durable was down by 180bps YoY at 9.5% and down by 160bps QoQ. The margin was impacted due to the EBIT margin of fan and air-cooler declined due to the extended winter season which has resulted into the high inventory. The lighting division reported an increase in EBIT margin by 480bps QoQ and up by 240bps YoY at 10.4% in Q4FY12.
E&P business has a current order book of Rs. 610 crores declining 19% YoY on weaker inflows from Rs 690 crores. Transmission line tower/Highmasts/ Special projects accounted for 30%/21%/49% of the order book. Bajaj Electricals managed to close 18 sites during FY12. It plans to bring down the number of operational sites to 60 by FY13 end from 76 currently. E&P business register a slump in revenue growth by 2.1% YoY to Rs. 367.81 crores. Q4FY12 being a good quarter for E&P business saw a jump of 105.1% in revenue on QoQ basis. The EBIT margins improved on QoQ basis but declined on YoY basis to 5.6%.
The interest cost was up by 150% YoY to Rs. 16.31 crores further squeezed out the PAT margins at 4.6% in Q4FY12 as against 6% in Q4FY11 and 4.1% in Q3FY12.
Valuation & Recommendation
At CMP of Rs. 197, the stock is trading at a PE of 11.5x in FY13E. We feel that E&P business is the major concern for the company where, the delay in closure of old projects, delay in clearance of projects by the government and lower EBIT margin projects has resulted into the dismal quarter for the company for the straight four quarters. The management on the other hand sounds positive as the company has bid for projects having higher margins which in our view will improve the overall margins for the company going forward. Though we are bit cautious about the slow order intake and low margin in E&P division. We cut our earnings estimate for FY13E by 15% to reflect continuing cost pressure and delay in pick-up in order inflow in the E&P segment. We have initiated Bajaj Electricals at Rs. 186 on 22nd September 2011 with a target price of Rs. 238. The stock had hit a high of Rs. 234 on 22nd May 2012 thereby generating 25.8% return. We have already recommended investors to book profits at current levels in the morning extract on weaker E&P projects and uncertain demand condition. We have revised our target price of Rs. 178 per share FY13E.
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