Buy Bajaj Electricals Ltd for the Target Rs 281 by Prabhudas Liladhar Ltd
Weak Fan Demand Weighs on Growth
Consumer Products (CP) revenue grew by 2.4% YoY, driven by double-digit growth in kitchen appliances, water heaters and steam irons, while fans declined by more than double digits, partly offsetting the growth. BLDC fans grew 56% YoY, contributing approximately 17% of the fan portfolio. Lighting Solutions revenue declined by 1.3% YoY, as double-digit growth in consumer lighting, supported by wires and switchgear, was offset by weakness in professional lighting. Lighting EBIT margin declined to 3.1% from 7.9% in Q2FY26, impacted by adverse product mix and operating deleverage. Management aims to absorb more than half of input cost inflation through productivity improvements, with pricing actions implemented in lighting and further hikes under evaluation in consumer products. Alternate channels grew 7.0% YoY, with double-digit growth in e-commerce and high double-digit growth in exports, while general trade declined 3% YoY. We estimate FY26-29E revenue/EBITDA CAGR of 5.9%/30.8%. We value the stock at 25x Sep’28 EPS and arrive at revised TP of INR281 (earlier INR302). We downward revise our FY28/29 earnings estimate by 8.4%/8.0% due to weak CP demand and decline in fan segment. Maintain ‘Hold’
Q2FY27 performance:
Revenue grew by 1.5% YoY to INR11.2bn (PLe: INR12.0bn). Consumer Products revenue grew by 2.4% YoY to INR8.5bn, while Lighting revenue declined by 1.3% YoY to INR2.7bn. Gross margin expanded by 10bps YoY to 31.9% (PLe: 30.5%). EBITDA grew by 8.0% YoY to INR669mn (PLe: INR589mn), with EBITDA margin expanding by 40bps YoY to 6.0% (PLe: 4.9%). Consumer Products EBIT margin expanded by 310bps YoY to 4.0%, while Lighting EBIT margin contracted by 480bps YoY to 3.1%. PAT grew by 164.7% YoY to INR261mn. Profit from JV/Associate stood at INR8mn vs Loss of INR47.7mn YoY.
H1FY27 performance: Revenue grew by 1.9% YoY to INR22.1bn. Consumer Products revenue grew by 2.0% YoY to INR16.7bn, while Lighting revenue grew by 1.5% YoY to INR5.4bn. Gross margin expanded by 70bps YoY to 32.1%. EBITDA grew by 51.2% YoY to INR1.4bn, with EBITDA margin expanding by 210bps YoY to 6.5%. Consumer Products EBIT margin expanded by 430bps YoY to 4.0%, while Lighting EBIT margin contracted by 430bps YoY to 4.9%. Reported PAT grew by 591.6% YoY to INR745mn. Profit from JV/Associate stood at INR12mn versus a loss of INR55mn YoY.
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SEBI Registration number is INH000000933
