Bajaj Electricals rallies 17% on stable outlook, up 37% so far in January

Last month, ICRA had reaffirmed its long-term and short-term rating of the company's line of credit

Shares of Bajaj Electricals hit a fresh record high of Rs 834 after rallying 17 per cent on the BSE in intra-day trade on Wednesday on expectations of a healthy revenue growth in the consumer products segment in near-term. The stock of the household appliances company was trading higher for the ninth straight day. It has zoomed 37 per cent thus far in the month of January 2021.

On December 25, 2020, rating agency ICRA had reaffirmed long-term and short-term rating of the company’s line of credit, along with non-convertible debenture (NCD) programme of the company. The outlook on the said long-term and NCD rating has been revised to 'Stable' from 'Negative’.

“The revision in the rating outlook to stable reflects a healthy improvement in revenue and profitability posted by Bajaj Electrical in the July-September quarter (Q2FY2021), especially in the consumer products (lighting, fans and appliances) segment, after a weak performance in the first quarter due to Covid-19. The outlook revision also takes into account the considerable reduction in the company’s debt level, which is likely to be maintained at a similar level, going forward,” ICRA said in rating rationale.

The company performed strongly in Q2FY21, reporting around 13 per cent year on year (YoY) revenue growth in consumer products segment on the back of healthy revival in demand, with easing of lockdown restrictions, increasing work from home culture, and pick up in the sale of small ticket size and essential nature of the products. This apart, the cost optimisation measures improved the profitability in the consumer products segment in Q2FY2021.

The stable outlook reflects ICRA’s expectation that the company would be able to sustain healthy revenue growth in the consumer products segment in the near term with profitability level in line with the company’s expectation. The stable outlook also reflects the company’s stated strategy to selectively focus on the EPC segment to ensure the budgeted profitability, it said.

At 10:22 am, Bajaj Electricals was trading 13 per cent higher at Rs 806 on the BSE as compared to a 0.31 per cent gain in the S&P BSE Sensex. The trading volumes on the counter jumped over two-fold with a combined 840,000 equity shares having changed hands on the NSE and BSE.