Bajaj Electricals (BUY, 41% upside) - Ambit

Bajaj Electricals will announce its 4QFY13 results today. We expect revenues to increase by only 2% YoY to Rs10.8bn, because we expect the revenue growth in the consumer durables (expect 9% YoY growth) and the lighting business (expect 26% YoY growth) to be offset by a revenue decline in the Engineering and Projects (E&P) segment (expect 22% YoY decline). However, we expect EBITDA margins to contract sharply to 1.1% from 8.1% in 4QFY12, as the company may possibly continue to make further provisions related to its E&P business in a bid to clean up the accounts in FY13 itself. We have assumed an EBIT loss of Rs643mn for the quarter in the E&P segment compared to EBIT margins of 8.5% and 10% in lighting and consumer durable business. This is likely to result in the EBITDA declining by 86% YoY to Rs122mn. Consequently, after interest and depreciation expenses, we expect the company to report a loss of Rs12mn for the quarter as compared to Rs490mn in 4QFY12. At CMP the stock trades at 9.4x FY15 P/E. We continue to maintain our BUY stance with an upside of 40%.

Source : Equity Bulls

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