Dear All,
Forwarding you the Result Update on Bajaj Electricals for 4QFY2011 with a Neutral Recommendation.
Bajaj Electricals (BEL) posted strong top-line growth of 24.9% yoy to `980cr (`784cr) in 4QFY2011, in line with our estimates. OPM fell by 138bp to 10.4% (11.8%), below our estimates, mainly because of higher-than-expected
raw-material prices. Further, there was a write-off of `5cr on the loan extended to Hind Lamps Ltd., due to which PAT came in below our estimates at `64cr (`51cr). Going ahead, we expect the company to maintain its strong growth momentum. However, in view of lower-than-expected margins during the quarter, we have revised our OPM estimates for FY2012E and FY2013E downwards by 51bp and 41bp to 9.8% and 9.9%, respectively. We recommend Neutral on the stock.
Top-line growth driven by E&P and consumer durables segments: The company’s sales grew by 24.9% yoy due to strong performance by the engineering and projects (E&P) and consumer durables segments, which grew by 29.8% and 28.9%, respectively, while the lighting segment grew by 10.4% yoy. High raw-material prices negatively affected the company’s OPM, which fell by 138bp yoy to 10.4%, while improving by 11bp on a qoq basis.
Outlook and valuation: We expect the trend of strong top-line growth to continue going ahead as well. Overall, we expect the company to post a top-line CAGR of 20.4% over FY2011–13E. However, the company has been reporting depressed OPMs, owing to which we have revised our OPM estimates for FY2012 and FY2013 downwards by 51bp and 41bp to 9.8% and 9.9%, respectively. We expect PAT to register a CAGR of 27.2% to `241cr over FY2011–13E. At the CMP of `246, the stock is trading at 12.9x and 10.2x its FY2012E and FY2013E EPS, factoring in most of the positives. Thus, we recommend Neutral on the stock.
Kindly click on the following link to view the Report.
Bajaj Electricals - RU4QFY2011
If you have any further queries, feel free to call us on 022 39357600, Extn: 6865 or mail us at advisory@angelbroking.com
With best regards,
Fundamental Advisory Desk
Angel Broking
Akruti Star,6th Floor, Road No.7,MIDC, Andheri (E),Mumbai – 93.
Call : (91) (022) 39357600 Ext. 6865
Website : www.angelbroking.com
Disclaimer: Ours is an advisory role. The final decision and consequences based on our information is solely yours. Moreover, in keeping with regulatory guidelines, we do not guarantee any returns on investments. Prospective investors and others are cautioned that any forward-looking statements are not predictions and may be subject to change without notice.
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