Buy Bajaj Electricals, target price Rs 1440: ICICI Direct

ICICI Direct has buy call on Bajaj Electricals with a target price of Rs 1440. The current market price of Bajaj Electricals Ltd. is Rs 1147.2.

Bajaj Electricals, incorporated in the year 1938, is a Mid Cap company (having a market cap of Rs 13166.30 Crore) operating in Consumer Durables sector.

Bajaj Electricals key Products/Revenue Segments include Consumer Durables, Contract Revenue, Scrap and Other Operating Revenue for the year ending 31-Mar-2022.

Financials
For the quarter ended 30-09-2022, the company has reported a Consolidated Total Income of Rs 1243.51 Crore, up .49 % from last quarter Total Income of Rs 1237.41 Crore and down -6.02 % from last year same quarter Total Income of Rs 1323.19 Crore. Company has reported net profit after tax of Rs 62.00 Crore in latest quarter.

The company’s top management includes Mr.Shekhar Bajaj, Dr.Rajendra Prasad Singh, Dr.(Mrs.)Indu Shahani, Mr.Harsh Vardhan Goenka, Mr.Shailesh Haribhakti, Mr.Rajiv Bajaj, Mrs.Pooja Bajaj, Mr.Madhur Bajaj, Mr.Anuj Poddar, Mr.Munish Khetrapal. Company has S R B C & Co. LLP as its auditors. As on 30-09-2022, the company has a total of 12 Crore shares outstanding.

Investment Rationale
The company's consumer products (CP) segment has grown at a CAGR of 11.1% over FY19-22 led by new product launches and dealer expansion into new geographies. Going forward, the brokerage believes the company's CP revenue to grow at a CAGR of 14% over FY22-24E led by new product launches (into lightings and appliances segments), expansion of its sales & distribution channel and market share gains in its key product segments. On the margin front, ICICI Direct builds in EBITDA margin expansion of ~330 bps over FY22-24E led by improving sales mix and easing raw material prices.

In order to streamline its business structure, the company plans to demerge its low margin engineering & project business by the end of FY23E. ICICI Direct is of the view that stronggrowth in the consumer product segment, robust balance sheet condition and restructuring of business profile will benefit the company in the long run.

Promoter/FII Holdings
Promoters held 62.91 per cent stake in the company as of 30-Sep-2022, while FIIs owned 10.51 per cent, DIIs 12.3 per cent.