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Bajaj Electricals Ltd. reported a 6% year-on-year (y-o-y) growth in its consolidated operating revenue to 1,334 crore for the March quarter (Q4FY22). The modest growth was on account of weak performance in the consumer products segment, contributing 78% to Q4 operating revenue, which in turn was due to muted rural demand and lower offtake in e-commerce channels. The segment's revenue grew 6% y-o-y. 

The company in the post-earnings call said its exposure to rural areas, where demand remains dull, is higher than that of its peers.

Fans and lighting reported 22% and 32% y-o-y growth in revenue, respectively, while appliances and Morphy Richards’ revenue declined 5% and 35% respectively.

Revenue in the EPC (engineering, procurement and construction) segment grew about 5% and it turned Ebit (earnings before interest and tax) positive in Q4.

The company did not undertake any price hikes in Q4. This coupled with elevated input costs weighed on the gross margin which declined 309 basis points (bps) y-o-y to 29%. One basis point is 0.01%. Ebitda (earnings before interest, tax, depreciation and amortization) margin dropped 104bps. Also, unlike its peers, Bajaj Electricals did not cut back on research and development expenses, the management said.

“Notwithstanding the 4QFY22 weakness, we continue to like Bajaj Electricals given it demonstrated a) turnaround in the EPC business (cash flow generation; containment of revenue growth; EBIT positive in 4QFY22), b), margin improvement and strong cash flow generation in the consumer products business as it continues to invest in product rejuvenation (category presence, premium mix, etc.) as well as brand-building activities c) demerger of its EPC business," said analysts at JM Financial Institutional Securities Ltd in a report on 17 May.

The company turned net debt free in FY22.

Going ahead, the management is hopeful of recovery in rural demand. It took price hikes of 5% in April.

“We model Bajaj Electricals to report revenue and profit after tax CAGR of 14.1% and 38.5%, respectively over FY22-FY24E and return on capital employed to be >16% by FY24," said analysts at ICICI Securities in a report on 18 May. CAGR is compound annual growth rate.

Shares of Bajaj Electricals were down about 4% on Wednesday, having ended 9% higher in the previous session.

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