MLR Securities is bullish on Bajaj Electricals and has recommended buy rating on the stock with a target of Rs 262 in its October 28, 2011 research report.
“Bajaj Electricals has a strong distribution network with 19 branch offices besides having a chain of about 1000 distributors, 4000 authorized dealers, more than 450,000 retail outlets and over 282 customers care centers across India which ensures efficient rollout of goods and services to the end consumers. Launched new products such as pressure cookers, water purifier, water pumps, digi sets and LED lanterns which have received a fairly good initial response from the market. The company is optimistic about scaling up its volumes over the next two to three years and improve its product portfolio. It has a diversified business model which caters to the direct consumers as well as focus on infrastructure. Thus, with presence in different consumer markets, it is able to generate stable flow of revenues by focusing on new business opportunities.”
“T&D Segment’s order book as of 1QFY12 stands at Rs 730 Cr providing revenue visibility for next 1-1.5 years. Transmission Line Towers account for 40% of the total E&P order book. Special Projects account for 42% and High Mast share is 18%. The company has bid for close to Rs 2,300 Cr worth of projects. Under the transmission line towers the company has bid for Rs 1,500 Cr worth of projects, Rs 400 Cr for High Mast Division and Rs 400 Cr for Special Projects.”
“The E&P division reported losses in Q1FY12 because of seasonally weak quarter coupled with closure of some old projects by the company resulting into the cost pressure. The company is taking several initiatives to bring back the E&P business on track. For this, the company is bringing down the number of projects from 82 levels to ~ 50 projects by the end of the year. The company has guided the completion of the cleaning process by Q2FY12 and the improvement in margins thereafter. We believe its strong distribution network, launch of new products and robust demand growth from the domestic market will drive its volume growth going forward. On a conservative approach, we have valued the stock 16 times FY13 EPS of Rs 16.4 giving a target price of Rs 262 an upside potential of 32% from the current levels,” says MLR Securities research report.
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“Bajaj Electricals has a strong distribution network with 19 branch offices besides having a chain of about 1000 distributors, 4000 authorized dealers, more than 450,000 retail outlets and over 282 customers care centers across India which ensures efficient rollout of goods and services to the end consumers. Launched new products such as pressure cookers, water purifier, water pumps, digi sets and LED lanterns which have received a fairly good initial response from the market. The company is optimistic about scaling up its volumes over the next two to three years and improve its product portfolio. It has a diversified business model which caters to the direct consumers as well as focus on infrastructure. Thus, with presence in different consumer markets, it is able to generate stable flow of revenues by focusing on new business opportunities.”
“T&D Segment’s order book as of 1QFY12 stands at Rs 730 Cr providing revenue visibility for next 1-1.5 years. Transmission Line Towers account for 40% of the total E&P order book. Special Projects account for 42% and High Mast share is 18%. The company has bid for close to Rs 2,300 Cr worth of projects. Under the transmission line towers the company has bid for Rs 1,500 Cr worth of projects, Rs 400 Cr for High Mast Division and Rs 400 Cr for Special Projects.”
“The E&P division reported losses in Q1FY12 because of seasonally weak quarter coupled with closure of some old projects by the company resulting into the cost pressure. The company is taking several initiatives to bring back the E&P business on track. For this, the company is bringing down the number of projects from 82 levels to ~ 50 projects by the end of the year. The company has guided the completion of the cleaning process by Q2FY12 and the improvement in margins thereafter. We believe its strong distribution network, launch of new products and robust demand growth from the domestic market will drive its volume growth going forward. On a conservative approach, we have valued the stock 16 times FY13 EPS of Rs 16.4 giving a target price of Rs 262 an upside potential of 32% from the current levels,” says MLR Securities research report.
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