Bajaj Electricals - 4QFY2015 Result Update - Angel Broking

Bajaj Electricals (BEL) managed to report a good set of results for 4QFY2015 after several quarters of disappointing numbers. For 4QFY2015, the top-line improved by a modest 3.2% yoy to Rs. 1,311.7cr with subdued performance of Lighting and Consumer Durables (CD) segment being offset by better performance of the Engineering & Projects (E&P) division. The EBIDTA came in at Rs. 77.4cr as against Rs. 5.6cr in 4QFY2014 led by better performance of the E&P division. The EBIDTA margin came in at 5.9% as against 0.4% in the corresponding quarter a year ago, due to lower raw material cost and other expenses (lower provisioning yoy). The strong operating performance resulted in the company reporting a net profit of Rs. 46.9cr as against a loss of Rs. 10.6cr in the same quarter last year.

Revival in E&P boosts confidence: Over the last two years, the overall financial performance of BEL has been impacted by poor performance of the E&P segment on account of low margin legacy orders in the segment. To add to that, the Lighting (Lighting & Luminaries) and CD segments have been witnessing some pressure in the last three quarters due to low volumes. However, with the legacy orders almost completed with necessary provisions and write-offs having been taken into account, we expect the E&P segment to report a better performance, going forward. Further the company has a strong order book of Rs. 3,400cr which has relatively higher margins. We expect consumer sentiments to improve post 2HFY2016 owing to easing inflation and interest rate cuts, the effects of which tend to realize with a lag effect. Growth in the CD segment will be owing to increase in discretionary spending while the Lighting segment is expected to revive due to pickup in infrastructure and real estate sector.

Outlook and Valuation: With expectations of timely execution of the existing projects in the E&P segment and Lighting and CD segments expected to benefit from an improvement in consumer sentiments post 2HFY2016, we expect the topline to grow at a CAGR of 11.4% over FY2015-FY2017E to Rs. 5,287cr. We expect the company to report a net profit of Rs. 128cr as against a loss of Rs. 14cr in FY2015. We retain our Buy rating on the stock with a target price of Rs. 341, valuing the company at 0.7x EV/Sales on FY2017E.

Shares of BAJAJ ELECTRICALS LTD. was last trading in BSE at Rs.273.2 as compared to the previous close of Rs. 272.3. The total number of shares traded during the day was 63144 in over 1876 trades.

The stock hit an intraday high of Rs. 279.8 and intraday low of 271. The net turnover during the day was Rs. 17408650.

Source : Equity Bulls

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