Bajaj Electricals - Still Under the Weather; Visit Note ::Edelweiss, link

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We met Bajaj Electricals’ (BJE) senior management to get an update on the company’s business. Its consumer facing business is facing headwinds due to consumption slowdown. Additionally, demand shift from CFLs to LEDs is denting the lighting division. BJE is now training its guns on turning around the engineering & projects (E&P) business. Management indicated that with near completion of E&P legacy projects, it is now sharpening focus on reducing receivables over the next few months. Also, it has put in place better internal controls to ensure that issues faced in this division in the past are not repeated. In consumer durables, the company is expanding its offerings with dealers to capture higher wallet share. BJE anticipates moderate improvement in consumer facing business in FY16.

Consumer sentiment weak; E&P turnaround expected in FY16

Weak consumer sentiments have taken a toll on BJE’s consumer durable business as it grew mere ~10% in H1FY15. Shift in consumer demand to LEDs from CFLs impacted the company’s lighting business. Moreover, limited on-the-ground activity dented the infra related business (lighting and luminaries). However, BJE expects moderate uptick in consumer facing business in FY16. In E&P, legacy projects are almost complete and management expects the internal controls put in place now to propel profitability of the business from FY16. Also, on the anvil are measures to pare the receivables towards legacy projects (~INR3bn) over the next few months.

LINK
https://www.edelweiss.in/research/Bajaj-Electricals--Still-Under-the-Weather;-Visit-Note/27836.html