Bajaj Electricals - Q2FY21 First Cut - ICICI Direct

(CMP: Rs. 503; MCap: Rs. 5728 crore)

Bajaj Electricals reported a healthy performance in Q2FY21 led by strong performance of electrical consumer durable (ECD) division and a strong recovery in the project business. Company generated positive Cashflow from Operations of Rs. 467 crore as against Rs. 294 crore in the corresponding H1FY20. Debt has reduced from Rs. 962 crore as at March'20 to Rs. 559 crore as at Sept'20.

Q2FY21 Earnings Summary

- Revenues came in at ~Rs. 1217 crore, grew by a healthy rate of 11% YoY in Q2FY21 mainly due to 13% YoY growth in the revenue of ECD segment to Rs. 792 crore. Focus on execution of pending projects helped drive revenue growth of the segment up by 8% to Rs. 425 crore

- The EBITDA margin increased strongly by 640 bps YoY to 8.6% led by expansion in gross margin by 500 bps YoY. Segment wise, EBIT of consumer durable segment stood at Rs. 85 crore (EBIT Margin at 10.7%), while, company reported profit at EBIT level in project business after a gap of four quarters. The Engineering and Project segment EBIT came in at Rs. 7 crore in Q2FY21 as compared to loss of Rs. 18 crore in base period

- Reduction in debt led to decline in interest cost by 51% YoY Rs. 22 crore during Q2FY21. This coupled with strong operational performance resulted in a strong recovery in bottomline as company reported PAT of Rs. 53 crore against loss of Rs. 11 crore in base quarter

We believe strong ECD distribution networks (over 1.7 lakh touch points), improving segment profitability through change in mix, limited exposure in the project business and debt reduction plans on card are the key monitorables for stocks in the medium to long term. We would revisit our estimates post conference call.

Shares of BAJAJ ELECTRICALS LTD. was last trading in BSE at Rs.503.55 as compared to the previous close of Rs. 486.6. The total number of shares traded during the day was 45432 in over 2907 trades.

The stock hit an intraday high of Rs. 514.4 and intraday low of 488.5. The net turnover during the day was Rs. 22921060.

Source : Equity Bulls

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