Bajaj Electricals shares zoomed 20 per cent to hit a new high of Rs 1,106 in intra-day trade on the BSE on Monday. The stock has now rallied 50 per cent in three days after the company reported robust consolidated net profit of Rs 98 crore in the December quarter (Q3FY21), on strong performance by consumer products (CP) business. The household appliances maker had recorded a profit of Rs 9 crore in the year-ago quarter.
Analysts have a positive stance on Bajaj Electricals, given resilient demand momentum across product categories, more so in kitchen appliances, market share gains aided by increased distribution reach in smaller towns/ rural India and mass market positioning, persistent expansion of CP margins sustained improvement of balance sheet aided by robust cash flows generation. Although sustained recovery in engineering, procurement and construction (EPC) is sometime away, management expects operational profitability by Q2FY22.
The earnings before interest and tax (EBIT) for the CP segment stood at Rs 142 crore, showing a 115 percent rise over the year-ago period. The management said the CP business has delivered a strong growth in this quarter despite continuing supply challenges and increase in commodity prices and has delivered its highest ever quarterly EBIT. The EPC segment has reduced its loss, while continuing to focus on execution and working capital, it said.
“We continue to remain structurally positive on Bajaj Electricals given strong brand with leadership position in kitchen appliances; deep distribution network and RREP led gains in profitability, reach and working capital. Benefitting from operating leverage and changing mix, we build in 420bps margin expansion over FY20-23,” analysts at Prabhudas Lilladher said in result update.
Analysts at ICICI Securities believes strong demand outlook of CP category along with focus on acceleration of collections in the EPC business would further improve P&L and balance sheet of Bajaj Electricals, going forward. Given the strong performance and future outlook we tweak our earnings estimate upward by 37 per cent, 47 per cent for FY22E, FY23, respectively, the brokerage firm said in stock update.
At 11:42 am, Bajaj Electricals was up 16 per cent at Rs 1,065 on the BSE, against 1.3 per cent rise in the S&P BSE Sensex. The trading volumes on the counter jumped over three-fold with a combined 3.8 million equity shares changing hands on the NSE and BSE.