Performance largely hit by project division… • Bajaj Electricals ::ICICI Securities, report link

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

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Bajaj Electricals - Yet Another Disappointing Quarter; Result Update Q2FY15:: Edelweiss

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BUY Bajaj Electricals :: ICICI Securities, PDF link

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Major order inflow…
Bajaj Electricals’ engineering & project (E&P) division has bagged eight
new orders of | 518 crore under the Rajiv Gandhi Grameen Vidyutikaran
Yojna (RGGVY) from Madhya Pradesh Purva Kshetra Vidyut Vitaran
Company for the Jabalpur and Bhopal districts. These orders will be
executed in the next 24 months. The current order book size stands at
| 3359 crore. The E&P segment witnessed 13% YoY revenue growth
during Q1FY15 as the company has largely focused on maintaining the
margin. The EBIT loss narrowed down substantially QoQ from | 26 crore
to ~| 6 crore in Q1FY15. The EBIT also includes incremental depreciation
charges of | 2 crore due to a change in the depreciation policy.

Our stance
With an expected turnaround in the E&P business from FY15E onwards
and continued dominance in the lighting & CD business, we expect BEL to
generate EBITDA of | 315 crore in FY15E and | 430 crore in FY16E. We
believe the stock is trading at attractive multiples considering the
turnaround in the E&P segment. We have valued the CD, lighting and E&P
business at 12x, 6x and 6x FY16E EBITDA, respectively, to arrive at a
target price of | 416/share with a BUY recommendation.

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Bajaj Electricals :: ICICI Securities

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Major order inflow in E&P segment…
Bajaj Electricals’ engineering & project (E&P) division has bagged four
orders of | 602 crore under the TLT and special projects categories. New
order inflows consist of | 66 crore from transmission lines in Tamil Nadu
& West Bengal from Power Grid Corporation of India (PGCIL) and West
Bengal State Electricity Transmission Company. Also, | 535 crore is from
special projects includes rural electrification (under RGGVY XIIth Plan)
works at Bihar from north and south Bihar power distribution company.
The current order book size stands at | 2800 crore. The E&P segment
witnessed 13% YoY revenue growth during Q1FY15 as the company has
largely focused on maintaining the margin. The EBIT loss narrowed down
substantially QoQ from | 26 crore to ~| 6 crore in Q1FY15. The EBIT also
includes incremental depreciation charges of | 2 crore due to a change in
the depreciation policy.
Consumption story to remain intact
The core business of BEL (CD, lighting contributes ~70% to topline)
recorded a subdued FY14 performance. Given the GDP growth in FY14
slowed down to 4.7%, urban and rural income levels were negatively
impacted. This, in turn, resulted in dismal segment revenue growth of
~5%, ~8% YoY, respectively, with muted offtake of kitchen appliances,
fans and luminaries. However, under the appliances category, BEL’s
premium brand Morphy Richards (MR) recorded sales growth of 11%
YoY to | 190 crore in FY14. BEL plans to revamp its MR product portfolio
with new models in the premium segment in steam irons, mixers, food
processors, induction cookers, instant water heaters and dry irons.
However, BEL is facing stiff competition from LED lighting manufacturers
as CFL is losing ground to LED products. Still, segment revenue would be
driven by the luminaries segment. We expect the CD & lighting segment
revenue to witness CAGR of 17%, 10%, respectively, in 2014-16E.
Execution of higher margin projects to drive overall margin
BEL’s E&P segment remained a laggard over last two years at the EBIT
level, despite sales CAGR of ~18% during FY12-14, largely due to sharp
cost overruns on legacy projects. During FY14, the company completed
40 legacy sites, which were loss making and recorded a loss of | 103
crore. However, the company turned cautious and focused on bidding
only on higher margin projects to improve profitability. We believe new
orders would flow in the P&L from FY16 onwards. With a completion
period of 24 months, the major part of revenue would flow in FY17E.
However, continuous order inflow improved the visibility of revenue
booking from the E&P segment. We believe BEL will benefit from the
government’s thrust to improve power infrastructure in India. We expect
E&P segment to record ~22% sales CAGR in FY14-16E with positive EBIT
of | 54 crore and | 86 crore in FY15E and FY16E, respectively.
Consumer business to drive rating
With an expected turnaround in the E&P business from FY15E onwards
and continued dominance in the lighting & CD business, we expect BEL to
generate EBITDA of | 315 crore in FY15E and | 430 crore in FY16E. We
believe the stock is trading at attractive multiples considering the
turnaround in the E&P segment. We have valued the CD, lighting and E&P
business at 12x, 6x and 6x FY16E EBITDA, respectively, to arrive at a
target price of | 416/share with a BUY recommendation.


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Technicals: Essel Propack, Bajaj Electricals, BHEL, Ashok Leyland, Glenmark, ITC : Business Line

Bajaj Electricals :: Religare Research

E&P business continues to dent profitability
BJE’s Q4FY13 PAT at Rs 6.3mn (↓99% YoY) missed estimates owing to operating losses of Rs 0.5bn in the E&P segment and margin contraction in the Lighting and Consumer segments. Sales growth of 5% YoY was driven by traction in Lighting (up 22% YoY) and Consumer Durables (up 15% YoY). However, EBIT margins for Lighting/Consumer segments declined 150bps/250bps YoY to 8%/7.9%, impacted by clearance of slow/non-moving inventory. Maintain BUY on attractive valuations.
 Provisioning/cost overruns in E&P segment continue to dent profitability: The E&P segment (25% of Q4 revenues) continued to be impacted by provisioning/cost overruns. Segmental operating losses stood at Rs 0.5bn in Q4, higher than losses of Rs 0.27bn/Rs 0.4bn incurred in Q2/Q3.
 Clearance of slow/non-moving inventory impacts margins in Consumer and Lighting segments: As per management, BJE cleared slow-moving or non-moving inventory to the tune of Rs 0.2bn, which impacted operating margins in Lighting/Consumer segments (margins down 150bps/250bps YoY to 8%/7.9%). Margins in these segments were further impacted by a depreciating INR. However, the company has taken price corrections in the months of April and May, the benefits of which should flow in in the current quarter.
 Order book at Rs 10.7bn remains strong: BJE’s current order book position stands at Rs 10.7bn (up 76% YoY) – TLT/high Mast/Special projects accounted for 39%/4%/ 57% of the order book.
 Guidance for FY14E: The management has guided for revenue growth of 18-20% in the Lighting segment, 20-22% in Consumer, and E&P sales of Rs 10bn – overall, sales guidance of Rs 42bn for FY14E. Our target price of Rs 225 assigns a target PE (1-year forward) of 10x. Maintain BUY.

BAJAJ ELECTRICALS E&P cost over runs wound profitability, yet again": Edelweiss,

Bajaj Electricals’ (BJE) Q4FY13 numbers were disappointing as lower
margins across businesses took a toll on overall profitability. While cost
over runs continued to plague engineering & projects (E&P), consumer
durables’ margin dipped due to inventory write-down of nonmoving/
defective items. Revenue grew 5% driven by consumer durables
(up 22%) and lighting (up 15%) even as E&P declined 22%. The company
estimates 25% (INR42bn) revenue growth and 100bps margin
improvement in consumer-facing business in FY14. We cut our FY14E and
FY15E earnings 9% and 8%, respectively, as we lower our E&P margin
estimate. We believe near-term pain is unlikely to subside in E&P as BJE
continues to execute low-margin sites. Hence, maintain ‘HOLD’ with
revised target price of INR185 (earlier INR200).

Light up your portfolio with Bajaj Electricals ::Business Line

Bajaj Electricals - conference call transcript-26-Jul-12 :Edelweiss

Please find enclosed the transcript of the conference call with Bajaj Electricals held on 26th July, 2012.

Bajaj Electricals - conference call transcript-26-Jul-12

Regards,

Bajaj Electricals Margins under pressure – Consumer appliances growth a silver lining:: ITI research

BJE’s Q4 FY12 Results was broadly in line with below our expectation which grew by 8%
YoY at Rs 10,602mn. The operating margin however was marginally below our
estimation remained at 8% a de growth of 200 bps YoY. The decline in the EBITDA
margin was due to raw material cost as % of sales climbed to 78% from 75% QoQ.
We expect current rupee deprivation would impact margins as input costs rise and BJE
will find it difficult to pass on the increased cost given the current demand scenario.
Along with that E& P BU continues to be a drag on the overall business as we see no
significant improvement in the margins given that Q4 is the best quarter for the
business. The segment reported an EBIT margins of 6% only 200bps improvement in
QoQ. We were expecting around 300‐350 bps improvement.
We are confident about the top line growth of 13‐14% for the BJE, as the focus on Tier 1
and Tier II cities will help them fight the demand slowdown in urban areas for consumer
appliances and Fans and also lighting business is expected to grow at 15‐20% range. BJE
has a total order book size of Rs 610cr and another contract of Rs 650cr is expected to
be added as they are the L1 bidder.
We retain Accumulate with a TP of Rs 195

Bajaj Electricals- Target Rs 178: Nirmal Bang

Bajaj Electricals Ltd, has announced its Q4FY12 & FY12 results:: Microsec Research

Update: Bajaj Electricals - conference call transcript : :Edelweiss PDF link

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Please find enclosed the transcript of the conference call with Bajaj Electricals, held on 21st February, 2012.

Bajaj Electricals - conference call transcript-21-Feb-12

Bajaj Electricals: Buy ::Business Line

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BAJAJ ELECTRICALS Change of guard :: Edelweiss

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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.

Bajaj Electricals - conference call transcript : :Edelweiss PDF link

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Please find below the transcript of the conference call with Bajaj Electricals, held on 6th February, 2012.

Bajaj Electricals - conference call transcript-06-Feb-12

Bajaj Electricals - Change of guard; event update; Buy ::Edelweiss, pdf link

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Bajaj Electricals (BJE IN, INR 178, Buy)

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.

ACCUMULATE Bajaj Electricals:: price target of Rs 190 ::Kotak Sec

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BAJAJ ELECTRICALS LTD (BAEL)
PRICE: RS.171 RECOMMENDATION: ACCUMULATE
TARGET PRICE: RS.190 FY13E P/E: 11X
q BAEL has reported Q3FY12 results in line with our estimates driven by
lighting and consumer durable segment.
q Engineering & Project segment reported muted sequential profit growth.
Margins continue to remain under pressure for the segment on account
of delay in pick up in major infrastructure projects in India.
q Pick-up in demand for lighting and consumer business in tier ii cities
augers well for company's growth. However rising interest rate and input
price trend would remain the key variable to monitor for next few
quarters.
q We tweak our estimates upward for FY13 to factor in margins stabilizing
at current levels and improvement in working capital for 2HFY13.
q In view of limited upside from current levels, we change our recommendation
to 'Accumulate' (from 'BUY' earlier) on the company's stock with
a one year DCF based revised price target of Rs 190 (Rs 180 earlier).

3QFY2012 Result Update Bajaj Electrical:: Reliance capital

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Consumer Durables and Lighting show the growth path
Key highlights of the result
 Net Sales grew ~15% yoy: Bajaj Electrical’s (BEL) Net Sales for 3QFY2012
grew ~15% yoy to ~Rs794cr (~Rs690cr in 3QFY2011), whereas, it grew ~13%
qoq (Rs701cr in 2QFY2012). The increase in top-line on yoy basis was due to
the strong growth in sales in different segments like Lighting (up ~19% yoy/ ~6%
qoq), Consumer Durables (up ~25% yoy/ ~22% qoq), Others (up ~6% yoy) and
also because of the volume and average realization price.
 OPMs marginally under pressure: The Company reported EBITDA of ~Rs65cr in
3QFY2012, de-growth of ~9% yoy. EBITDA margin contracted a significant
212bp yoy on account of higher raw material prices (up 282bp yoy), purchase of
traded goods (up 7bp yoy), employee costs (up 14bp yoy), other expenses (up
199bp yoy) and loss on forex transaction of Rs2.5cr. On a sequential basis
EBITDA margin was higher 66bp.
 Net Profit declines ~19%: Net Profit for 3QFY2012 decreased ~19% yoy to
~Rs33cr (~Rs41cr in 3QFY2011), due to poor operating performance on account
of increased raw material prices, higher interest cost (up ~64% yoy to Rs15cr)
and higher tax (up 84bp).
Outlook and Valuation
Bajaj Electrical’s 3QFY2012 results were very disappointing. Considering the overall
9MFY2012 results, we have lowered our estimates for FY2012E and FY2013E for
BEL (the company’s earnings for 9MFY2012 were not as per expectations due to
higher interest cost i.e. ~72% yoy jump in interest costs to ~Rs39cr in 9MFY2012
vis-à-vis ~Rs23cr in 9MFY2011). However, we expect the company to report Net
Sales CAGR of ~16% and Net Profit CAGR of ~8% over FY2011-13E.
The management has given a guidance of double-digit sales growth for FY2012
(~Rs3,200cr) & FY2013 (~Rs3,700-3,800cr), but on the margins front, the
management did not seem much confident going forward, due to competition, high
interest cost, increasing raw material prices etc. Nonetheless, we believe that the
company is set to witness robust growth in the coming financial year, driven by both
E&P segment order book worth ~Rs783cr and its continued focus on - product
innovation, value engineering, cost reduction and new product introduction. At the
CMP of Rs169, the stock is trading at a P/E of 13.3x and 10.1x its FY2012E and
FY2013E EPS respectively. We maintain Buy on Bajaj Electricals with a revised
target price of Rs201 (Rs230 earlier).
Risks to the view
 Prolong slowdown in the Indian economy can have an adverse effect on the
growth prospects of the company
 Any unfavorable change in the prices of commodities, foreign exchange and
interest rates can have negative impact on profitability
 Delay in execution of jobs in E&P business can deteriorate earnings