Bajel Projects Ltd is in no hurry to make the elephant dance. Even as India’s renewable energy boom drives strong demand for power transmission projects, the Bajaj Group's engineering, procurement and construction (EPC) company is choosing steady growth over a rapid build-up of its order book, putting execution and margins first and passing up low-margin, high-risk business.
Chief executive and managing director Rajesh Ganesh, who is currently reading former IBM chief Louis Gerstner Jr.’s Who Says Elephants Can’t Dance? , has his own take on the metaphor from Gerstner's memoir on how he saved his firm from near-collapse and bankruptcy in the 1990s.
“A wild elephant dancing is of no use to anybody, right? ” said Ganesh in a rare media interview. "I think it is important to make sure that we build a fit for purpose, an organization that is sustainable.”
A career energy man, Ganesh worked with Castrol, Shell and Indian Oil Adani Ventures for nearly three decades before joining Bajel. His stress on discipline and resilience is also seen in his personal life, as the avid golfer and the former marathon runner is rather particular about his gym regime.
“We've been quite prudent in the way we've taken projects. It's not that difficult to build a big orderbook in this business," said Ganesh. “The challenge is in executing the order, and that's really where a lot of the EPC companies have got it wrong.”
Fixing processes, chasing growth
While there is a boom in business in the power transmission sector, Bajel Projects, which constructs power transmission lines, towers, and substations, is prioritizing fixing its internal processes, he said. The company is working on a framework that helps it decide which projects to bid for, he said.
“It's going to take a while in terms of putting these systems and processes in place,” said Ganesh.
And there is a good reason for the cautious approach.
Before Bajel Projects was demerged from Bajaj Electricals three years ago, the combined company was plunged deep into deep financial strain for the better part of a decade due to losses in the EPC business. Low-margin legacy projects, marred by delays and cost overruns were offsetting the profits of the consumer electricals business that made the company carve out this unit.
Bajel Projects had an EPC orderbook of ₹4,055 crore as of 30 June, an all-time high, but not much further than the ₹3,598-crore recorded at the end of FY24. Its peers like Transrail Lighting Ltd ( ₹16,035 crore), KEC International Ltd ( ₹40,000 crore) and Kalpataru Projects International Ltd ( ₹66,607 crore) have significantly larger orderbooks. The latter two also have diverse businesses beyond power transmission EPC.
The Bajaj company’s margins also lagged the industry level, with an Ebitda margin of 3.3% in Q1FY27 compared to 5.8-11.7% for the above-mentioned peers.
To augment its orderbook and also bulk up its margins, the company is making a concerted effort to diversify its business overseas into the Middle East and North Africa (Mena) region, Ganesh said. Overseas businesses bring richer margins, he said.
The larger peers enjoy better economies of scale. To that end, Bajel Projects is investing ₹170 crore to increase the manufacturing capacity for transmission towers at Ranjangaon, near Pune, from 56,500 tonnes a year to 110,000 tonnes by the next fiscal.
Another issue hurting the company due to its relatively smaller scale is employee churn. Amid a rapidly expanding industry, poaching of talent has gone up, delaying Bajel Project’s work on developing robust business processes, Ganesh said.
To that end, the company is developing its own cadre. It recruited 100 graduate engineers as trainees this year, the first time it hired freshers since becoming an independent company.
Investors back cautious approach
Would Bajel Projects’ disciplined and steady approach please investors at a time when the markets have got into a habit of seeing value rapid growth? For now, yes. Investors have rewarded the company’s high-quality ₹4,000-crore order book with a 25% appreciation in its share price over the last six months.
However, overall, the stock is up only 10% since its listing in December 2023 and is significantly below the high of ₹320 it touched in 2024. The stock ended 0.5% lower on the BSE on Friday at ₹184.85, giving the company market capitalization of just over ₹2,100 crore.
“I don't look at the markets. I think that's somebody else's job to look at it. My job is to make sure that we put good systems in place, we hire great people, and we build an organization that delivers on its promises,” Ganesh said, when quizzed about the company’s performance on the bourses.
Analysts at Antique Stock Broking have given the stock a buy rating, with a target price of ₹280.
“Backed by favorable power T&D (transmission and distribution) capex tailwinds, sustained anticipated growth in order inflows and backlog, and revamped management focus on execution discipline and cost control initiatives, Bajel is on the cusp of a healthy growth trajectory,” the analysts wrote in an 11 August note.