Bajaj Electricals Limited — Lighting Your World

Bajaj Electricals Limited operates in lighting, home appliances, fans, luminaries, and engineering and projects businesses primarily in India. The Company provides engineering products, consumer products and luminaries.

Engineering products: Bajaj Electricals provides engineering and projects services consisting of mobile light tower mast lighting, flag mast, street furniture projects, including cast iron ornamental lamp posts, hot dip galvanized poles, and glass reinforces polymer composite poles; specialty projects, such as rural electrification, stadium lighting, and transmission line towers.

Consumer products: Bajaj Electricals offers food processors, mixer grinders, juicer mixer grinders, hand blenders, choppers, oven toaster grillers, microwave ovens, etc.

Luminaries: Bajaj Electricals offers lighting products, such as LED lights, fluorescent lamps, fluorescent tube lights, fans; power solutions, including inverters, home UPS, and generators.

Bajaj Electricals Limited is one of the Multibagger Shares, identified by Dynamic Research based on technical and fundamental research.

Bajaj Electricals share price has touched a 52 week high of Rs. 282 on 10 -Aug -2016 and a 52 week low of Rs.155.00 on 29-Feb -2016, and is currently trading at Rs. 262.75.

Share Holding

The promoters holding in Bajaj Electricals stood at 63.55%, while Institutions and Non-Institutions held 13.66% and 22.79% respectively.

Some of the Non Promoters holding securities more than 1% of total number of shares are

  • Reliance Capital Trustee Co. Ltd-A/C Reliance small Cap Fund:1.48%
  • Swiss Finance Corporation (Mauritius) Limited:1.44%
  • Ocean Dial Gateway to India Mauritius Limited:1.04%

Financial Analysis

Quarterly Results

For the quarter ended June 2016, the total income from operations of Bajaj Electricals ltd has reported a decline by 5.18 % on Y-o-Y basis to Rs. 959.36 cr as against Rs. 1009.09 cr during the same quarter last year.

The operating profit of Bajaj Electricals ltd on standalone has decline by 7.12% Y-o-Y to Rs. 49.73 cr as against Rs. 53.27 cr during the same quarter last year.

The net profit of Bajaj Electricals has registered a growth of 12.66% Y-o-Y to Rs.22.87 cr as against Rs. 20.30 during the same quarter previous year.

The EPS of the company have showed a growth of 12.38% Y-o-Y to Rs. 2.27 as against Rs. 2.02 during same period last year.

Annual Results

For the year ended March 31, 2016 Bajaj Electricals ltd on standalone basis reported net sales of Rs. 4611.95 cr compared to Rs. 4258.11 cr FY2015 increased by 8.31% annually.

For the year ended March 31, 2016 Bajaj Electricals on standalone basis reported net profit of Rs. 95.61 cr compared to a loss of Rs. (-13.95) cr FY2015.

Ratio Analysis

The above ratio suggests that Bajaj Electricals is operating with a very minimal level of debt, and have enough liquidity to pay its short term obligation and can easily meet up with the interest expenses pertaining to its debt obligations. The company has reduced its interest cost from 23.72 cr in June quarter 2015 to 22.80 cr in June quarter 2016.

Investment Rationale

  • India is projected to become the 5th biggest consumer durables market in the world by 2025. Rural markets are expected to witness rising demand for consumer durables in the coming years as the government plans to invest extensively in rural electrification.
  • Transmission Line Towers has performed well in FY 2015–16 in terms of margins. The increase in the services related revenue by about 70 per cent has resulted in superb collection of dues against sales. The new orders intake for the year was Rs. 400 crore.
  • Transmission Line Towers business has completed and commissioned two sub-stations of 132 kiloVolt along with connected transmission lines and bays at Gohad for MPPTCL and Mungoli.
  • Bagged order for 220 KiloVolt sub-station along with connected transmission line and bay at Mittemari in Karnataka from KPTCL.
  • Successfully completed and commissioned 187 KM long 765 kV D/C Kudgi Kolhapur Transmission line for PGCIL.
  • Bajaj Electricals has Successfully completed and commissioned re-conductoring of Neyveli TS-I to TS-II expansion 400 kV link with HTLS conductor along with LILO of 2nd circuit of Neyveli-Trichy 400 kV D/C line at Nagapatnam Pooling Station.
  • Bajaj Electricals has Bagged 2 packages of 765 kV D/C Warora Parli transmission line from PGCIL.
  • Completed Pile Foundations at 15 tower locations for 132 kV transmission lines of BSPTCL with design, engineering and construction in record time of 6 months.
  • Bajaj Electricals is focusing on developing capabilities in other related business areas like usage of monopoles for transmission lines, laying of underground EHV cables and construction of EHV sub-stations, besides conventional transmission lines business. Further, to improve margins, Bajaj Electricals has decided to set its foot prints in overseas EPC transmission sector.
  • The Power Distribution Business has acquired orders worth Rs. 120 crore, including the prestigious orders of Madhya Pradesh Madhya Kshetra Vidyut Vitaran Company

Limited (MPMKVVCL) at Guna District and Feeder Separation Project by Madhya Pradesh Poorva Kshetra Vidyut Vitaran Company Limited (MPPKVVCL) at Rewa District and, to close the year-end order book at 1,677 crore.

  • The demand for LED Luminaires is gaining momentum with tremendous push from the Government and hence, the company has focused on the development of LED luminaires. Other than the government and local bodies, the company has serviced private corporates including Asian Paints, Accenture, Capgemini and Godrej.
  • Creating Smart Cities is one of the most important agenda of the Central Government and Bajaj Electricals has taken the challenge to provide high end lighting and smart solutions to such cities. The commencement has already been done by Bajaj Electricals by signing a contract for commissioning of pilot installations with satisfactory results and developing & launching City Infrastructure Management for Intelligent Public Street Lighting Solution.
  • Bajaj Electricals solar product has received an award “Outstanding contribution towards development of roof top solar industry” during Indian Rooftop Solar Summit 2016 held in January, 2016 at New Delhi.
  • The Government of India has recognized power sector as a key sector of focus so as to encourage continuous industrial growth and has taken many initiatives to boost up the power sector. The Government focus on attaining ‘Power For All’ has accelerated capacity addition in the country.

Investment Opinion

At CMP of Rs.262.75 the stock is trading at a P/E of 25.99, the market cap of the company is 2563.59 crore. As per Dynamic Levels we recommend a buy on Bajaj Electricals at 262.75 with a target of Rs.280.

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