Incorporated in 1938, Bajaj Electricals Ltd (BJE), part of Bajaj Group, is engaged in the business of Consumer Products (Appliances, Fans, Consumer Lighting), Exports, and EPC (Illumination, Transmission Towers, Power Distribution and Luminaires). Others segment include die casting, wind energy & solar energy. It is a dominant player in the consumer durables and lighting segment space.
Outlook and Valuation: We believe BJE’s strong brand equity, revamp of supply chain and wide distribution network particularly in rural markets would help support growth going ahead. The company’s focus on new launches particularly in the premium category will help drive market share gains and bode positively for margins. Also, increasing consumer preference for brand/quality products has led to a structural shift from the unorganized sector to the organized segment. The stock currently trades at ~50x/33x/25x FY18E/19E/20E EPS. We value the stock at 29x FY20E earnings arriving at a target price (TP) of Rs. 710.
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