During Q4 Bajaj Electricals Consumer business revenue registered strong 30% YoY growth supported by strong business momentum
After a strong rally seen by Bajaj Electricals Ltd during the last one year, the stock prices are up almost three folds. Nevertheless, the stock is cooling down a bit now. The Q4 performance too didn't help lift the sentiments and in fact, the stock is down more than 4% since the results. The near-term concerns on demand getting impacted by Covid led lockdowns is weighing on the street sentiments. The rising commodity prices too are looked as a dampener and can put pressure on the margins feel analysts.
“We change our FY22/23 earnings estimates by -9.4%/ 3% respectively given demand momentum stalled by Covid-19 second wave said analysts at Prabhudas Lilladher Pvt Ltd. The commodity inflation led margin pressures also remain a concern leading them to fine-tune their forward estimates.
During Q4 Bajaj Electricals Consumer business revenue registered strong 30% YoY growth supported by strong business momentum. While all product categories performed, market share gains too were visible in multiple categories say, analysts. Though the margins improved. However the same was below expectation said analysts at Antique Stock Broking Ltd. The adverse revenue mix in favour of lower-margin fans business meant that margins missed expectations.
The Engineering Procurement and Construction business on the other hand saw stress continue during Q4, even though losses reduced. Analysts see a soft outlook for the segment in the near term.
Bajaj Electricals' EPC division has been reeling under losses impacted by the legacy order in the power distribution category that the company is executing said analysts at Antique Stock Broking. The company has taken a conscious decision to scale down the power distribution business and focus more on illumination and transmission projects say, analysts. However, the EPC division is to continue to reel under losses till 1HFY21, say, analysts, though losses will be in a declining trend.
Meanwhile, analysts feel that the longer-term outlook for the company remains good. We remain structurally positive on longer-term prospects given a strong brand with a leadership position in kitchen appliances, deep distribution network, gains in profitability, reach and working capital say analysts at Prabhudas Lilladher. However, current valuations of 36.9 times FY23 earnings post rerating of stock over the last year (2.5x) is likely to limit near term upside they add.