Bajaj Electricals- Making Strides In Its Transformation Journey; HDFC Securities Initiates Coverage With A Buy

HDFC Securities Institutional Equities

We initiate coverage on Bajaj Electricals Ltd. with a Buy rating and target price of Rs 1,200. We believe Bajaj Electricals is a play on the growth opportunity in FMEG and anticipated rural recovery, given-

1. its diverse product offerings along with a leadership position within key categories in home and kitchen appliances;

2. its well-entrenched distribution network; and

3. its higher rural saliency vs peers (~two times of peers).

After turning net cash (after four decades) and simplifying its corporate structure under Phase 1 of its transformation journey, in its next phase, Bajaj Electricals is focused on industry-leading growth and aims to achieve it through-

1. refreshing the product portfolio;

2. offering products across the consumer value chain via a multi-brand strategy; and

3. stepping up investments in branding and innovation.

We expect Bajaj Electricals' revenue/Ebitda/profit after tax to grow at a CAGR of 14/38/47% over FY24-27. At current market price, Bajaj Electricals trades at 28 times FY27 earnings per share (10-40% discount to peers). We value the stock at 40 times June-26 EPS to arrive at a target price of Rs 1,200. Initiate coverage with a Buy rating.

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