For 1QFY2017, Bajaj Electricals (BEL)' top-line and bottom-line have come in below our estimates. The top-line growth was dampened by the poor performance of the Consumer durables and E&P segments. However, on the bottom-line front, the company reported a modest growth due to slight improvement in the operating performance and lower interest cost, depreciation cost and taxes.
Top-line de-grew 5% yoy: The top-line de-grew by ~5% YoY to Rs. 952cr (below our estimate of Rs. 1,188cr), mainly due to de-growth of 8% YoY in the Consumer Durables segment to Rs. 548cr and lower growth of ~1% YoY in the E&P segment to Rs. 414cr.
Despite revenue de-growth, PAT grew ~12%: On the operating front, the company reported a mild margin improvement (OPM up by 37bp YoY to 5.9%), primarily on account of lower raw material costs during the quarter. The reported net profit grew by ~12% YoY to Rs. 22cr, again underperforming our estimate of Rs. 27cr, on account of lower sales growth.
Outlook and valuation: On expectation of timely execution of new projects in the E&P segment and with the Lighting and Consumer Durables segments expected to benefit from an improvement in consumer sentiments going forward, we expect the company's top-line to grow at a CAGR of ~12% to Rs. 5,805cr and bottom-line to grow at a CAGR of 24% to Rs. 147cr over FY2016-FY2018E. We retain our Accumulate rating on the stock with a revised target price of Rs. 277.
Shares of BAJAJ ELECTRICALS LTD. was last trading in BSE at Rs.245 as compared to the previous close of Rs. 253.9. The total number of shares traded during the day was 47316 in over 942 trades.
The stock hit an intraday high of Rs. 254.05 and intraday low of 243. The net turnover during the day was Rs. 11685220.