Accmulate Bajaj Electricals Ltd For Target Rs. 384 by Prabhudas Liladhar Capital Ltd
Continued weakness in CP segment
Consumer Products (CP) revenue declined by 6.9% YoY to INR9.3bn, impacted by degrowth in fans mainly due to weak BLDC performance and domestic appliances due to high channel inventory in coolers, partially offset by strong double-digit growth in kitchen appliances. Lighting business continued to witness healthy momentum with 15.6% YoY growth, led by consumer and professional lighting, supported by higher mix of wires and switchgears along with steady order execution. Lighting EBIT margin improved driven by volume growth and fixed cost control, while CP margins remained under pressure due to lower scale. Management aims to drive recovery in the CP segment through improvement across all products and normalization of cooler inventory, while sustaining growth momentum in the lighting segment driven by wires. We estimate FY26-28E revenue/EBITDA CAGR of 12.1%/60.9%. We value the stock at 24x Mar’28 EPS and arrive at revised TP of Rs384 (earlier Rs449). We downward revise our FY27/28 earnings estimate by 18.4%/10.8% with contraction margin due to increase in commodity prices. Downgrade to ‘Accumulate’.
Q4FY26 performance:
Revenue declined by 2.1% YoY to INR12.4bn (PLe: INR11.4bn). Consumer Products revenue declined by 6.9% YoY to INR9.3bn, while Lighting revenue grew by 15.6% YoY to INR3.1bn. Gross margin contracted by 170bps YoY to 29.3% (PLe: 30.8%). EBITDA declined by 53.6% YoY to INR432mn (PLe: INR576mn), with EBITDA margin contracting by 390bps YoY to 3.5% (PLe: 5.1%), impacted by continued weakness in Consumer Products segment profitability. Consumer Products reported EBIT margin contraction of 470bps YoY to -0.7%, while Lighting reported EBIT margin expansion of 90bps YoY to 8.7%. The company reported a net loss of INR675mn, including JV loss of INR32mn and exceptional loss of INR556mn towards impairment of goodwill and molds & dies.
FY26 performance:
Revenue declined by 7.6% YoY to INR44.6bn. Consumer Products revenue declined by 12.2% YoY to INR33.4bn, while Lighting revenue grew by 9.5% YoY to INR11.2bn. Gross margin contracted by 40bps YoY to 30.6%. EBITDA declined by 50.8% YoY to INR1.5bn, with EBITDA margin contracting by 300bps YoY to 3.4%. Consumer Products reported EBIT margin contraction of 470bps YoY to -1.5%, while Lighting reported EBIT margin expansion of 190bps YoY to 8.5%. The company reported a net loss of INR909mn, including JV loss of INR136mn and exceptional loss of INR912mn.
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SEBI Registration No. INH000000271Accumulate Paradeep Phosphates Ltd For Target Rs.141 by Prabhudas Liladhar Capital Ltd
