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Systematix Research Report
Bajaj Electricals Ltd.'s Q4 result (revenue/Ebitda/profit after tax down 8%/47%/43% YoY) was dragged by weak performance in the consumer product business (revenue down 7% YoY; Ebit margin 1.8%, down 481 basis points YoY marred by high discounting).
Prime draggers were kitchen appliances, general trade (down 3%) and Bajaj Electricals' high dependance on slow moving rural market and non-premium categories. Fans, air coolers and Morphy Richards grew well though.
Despite weak earnings, cash flow stayed healthy (generated cash flow from operation of Rs 1.47 billion in Q4 and Rs 3.53 billion in FY24), aided by improved working capital cycle. Cash surplus at FY24 end stood high at Rs 3.05 billion.
Outlook of the lighting segment (Q4 revenue down 11% YoY; Ebit margin 8.5%, up 107 bps YoY) remained healthy. April saw better demand in both the segments; Q1 FY25 looks better than Q4 FY24.
Price hike in fans is scheduled from 16th May. After a weak Q4, we have cut our earnings estimates by 7-10% on lower revenue and margin expectations.
On the low base, we now expect 16%/53%/76% compound annual growth rate in revenue/Ebitda/PAT over FY24-26E, with 9.5% Ebitda margin, ~29% return on capital employed and 40%+ return on invested capital in FY26E. Maintain Buy with a lower target price of Rs 1,092 (30 times FY26E price/earning).
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