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Bajaj Electricals: Performance Highlights
Bajaj Electricals: Performance Highlights
Bajaj Electricals: Performance Highlights
Durables
May 29, 2012
Bajaj Electricals
Performance Highlights
Y/E March (` cr) Net sales EBITDA EBITDA (%) PAT 4QFY12 1,060 86 8.1 49.0 3QFY12 794 65 8.2 32.8 % chg (qoq) 33.6 33.1 (3)bp 49.2 4QFY11 980 102 10.4 57.5 % chg (yoy) 8.2 (15.3) (225)bp (14.7)
BUY
CMP Target Price Investment Period
Stock Info Sector Market Cap (` cr) Beta 52 Week High / Low Avg. Daily Volume Face Value (`) BSE Sensex Nifty Reuters Code Bloomberg Code Cons. Durables 1,963 0.9 272/133 29,073 2 16,439 4,990 BJEL.BO BJE@IN
Bajaj Electricals (BEL) posted modest top-line growth of 8.2% yoy to `1,060cr in 4QFY2012. The companys OPM for the quarter fell by 225bp yoy and declined by mere 3bp qoq to 8.1%. PAT for the quarter came in at `49cr, down 14.7% yoy. We recommend Buy on the stock. Top-line growth driven by the lighting and consumer durables segments: The lighting segment witnessed 23.1% yoy growth in revenue to `248cr and the consumer durable segment managed 10.4% yoy growth in revenue to `444cr. The engineering and projects (E&P) segment, however, witnessed a decline of 2.2% yoy in revenue to `368cr. The companys operating profit declined by 15.3% yoy to `86cr, largely due to margin compression. OPM fell by 225bp to 8.1%, mainly because of higher-than-expected other expenditure. The lighting segment witnessed a 140bp yoy increase in EBIT margin, while the consumer durable segment witnessed a 199bp yoy contraction in EBIT margin. The E&P segment reported EBIT of `21cr, down 48.2% yoy, while its margin declined by 497bp yoy to 5.6%, consequently bringing down the margin for the whole company. The companys PAT for the quarter came in at `49cr, down 14.7% yoy. Outlook and valuation: We believe consumer appliances and new product launches will fuel growth going ahead. Further, we expect the companys margin to improve from these levels on the back of easing commodity prices and closure of lower-margin E&P projects. Overall, we expect the company to post a top-line CAGR of 16.0% over FY201214E. We expect adjusted PAT to register a CAGR of 37.0% to `221cr over FY201214E. With the recent sharp correction, the stock is available at attractive valuation of just 8.8x FY2014 earnings, against its five-year historical average of 11x one-year forward earnings. We recommend Buy on the stock with a target price of `246, valuing the stock at 11x FY2014 earnings.
Shareholding Pattern (%) Promoters MF / Banks / Indian Fls FII / NRIs / OCBs Indian Public / Others 66.0 10.1 6.1 17.9
3m (7.3) 9.2
1yr (10.0)
3yr 12.4
(19.6) 132.8
Key financials
Y/E March (` cr) Net Sales % chg Net Profit % chg EBITDA Margin (%) FDEPS (`) P/E (x) P/BV (x) RoE (%) RoCE (%) EV/Sales (x) EV/EBITDA (x)
Source: Company, Angel Research
FY2011 2,741 23.1 130 16.5 8.7 14.7 13.4 3.2 26.2 33.1 0.7 8.5
FY2012 3,099 13.1 118 (9.2) 7.7 11.8 16.7 2.8 18.0 27.9 0.7 8.8
FY2013E 3,569 15.2 172 46.0 8.6 17.3 11.4 2.4 22.9 31.9 0.6 6.5
FY2014E 4,172 16.9 221 28.6 9.2 22.3 8.8 2.1 25.3 36.1 0.5 5.3
Sharan Lillaney
+91 22 3935 7800 Ext: 6811 Sharanb.lillaney@angeltrade.com
4QFY12 1,060 824.3 77.8 38.0 3.6 111.7 10.5 974.0 86.2 8.1 16.3 3.7 6.4 72.6 72.6 6.8 23.6 32.5 49.0 4.6 10.0 4.9 49.0
3QFY12 793.6 593.7 74.8 34.1 4.3 101.1 12.7 728.9 64.8 8.2 15.2 2.9 2.1 48.8 48.8 6.2 16.0 32.7 32.8 4.1 10.0 3.3 32.8
% chg (qoq) 33.6 38.8 11.3 10.5 33.6 33.1 (3)bp 7.4 26.7 200.5 48.8 48.8 47.9
4QFY11 980 764.5 78.0 32.4 3.3 81.0 8.3 877.9 101.7 10.4 6.5 3.4 2.3 94.1 (5.0) 89.1 9.1 30.6 34.3 1.1
% chg (yoy) 8.2 7.8 17.3 37.9 10.9 (15.3) (225)bp 150.2 7.0 180.7 (22.8) (18.5) (22.7)
FY2012 3,099 2,350.0 75.8 149.5 4.8 362.4 11.7 2,861.9 237.1 7.7 63.1 12.5 14.4 176.0 176.0 5.7 58.1 33.0 -
FY2011 2,741 2,094.7 76.4 122.4 4.5 285.6 10.4 2,502.8 238.0 8.7 29.1 10.8 5.7 203.9 203.9 7.4 74.0 36.3 (15.0) 144.9 5.3 9.8 14.8 159.8
% chg 13.1 12.2 22.1 26.9 14.3 (0.4) (765)bp 116.8 16.3 151.7 (13.7) (13.7) (21.5)
Segment-wise performance
For 4QFY2012, the lighting division posted growth of 23.1% yoy to `248cr. The segment reported higher EBIT of `26cr in 4QFY2012 compared to `18cr in 4QFY2011. EBIT margin of the segment increased by 140bp yoy to 10.4%. The consumer durables division maintained its strong growth momentum, with sales increasing by 10.4% yoy to `444cr. EBIT for the segment came in at `42cr, implying an EBIT margin of 9.5%, down 199bp yoy. The E&P segment posted a decline of 2.2% in sales to `368cr. EBIT margin of the segment declined by 497bp yoy during the quarter to 5.6%.
1,060 794
35 30
701 544
25
(%)
588 484
20 15 10 5 0
1QFY11
2QFY11
3QFY11
4QFY11
1QFY12
2QFY12
3QFY12
4QFY12
OPM (RHS)
12 8.2 8.1 10 8
(%)
(%)
80 60 40 20 0 41
1QFY11
7.5
6 4
45
2QFY11
71
3QFY11
102
4QFY11
30
1QFY12
53
2QFY12
65
3QFY12
86
4QFY12
49.0
2 0
(` cr)
40 30 20 10 0
1QFY11
2QFY11
3QFY11
4QFY11
1QFY12
2QFY12
3QFY12
4QFY12
Investment arguments
Strong brand image Leveraging on strong brands and substantial market share: BEL has a strong brand positioning and a well-spread distribution network. As per the company's internal estimates, it is the fastest growing player in the domestic appliances market, which is growing at 20% per year. In the small appliances market, BEL enjoys a market share of over 15-30% across all product categories. Future growth drivers Rural markets, acquisitions and newer verticals: BEL plans to capitalize on growth in rural markets. The company has also identified 7-8 potential acquisition candidates across businesses. Management expects about 15% of future sales to come from the acquired businesses. The company also plans to foray into newer verticals, including water management, which is an underpenetrated and rapidly growing market.
Balance sheet
Y/E March SOURCES OF FUNDS Equity Share Capital Preference Capital Reserves& Surplus Shareholders Funds Minority Interest Total Loans Deferred Tax Liability (Net) Total Liabilities APPLICATION OF FUNDS Gross Block Less: Acc. Depreciation Net Block Capital Work-in-Progress Goodwill Investments Current Assets Cash Loans & Advances Inventories Debtors Other Current liabilities Net Current Assets Mis. Exp. not written off Total Assets 170 68 102 0 37 1,199 61 178 209 751 692 507 646 230 77 153 37 1,575 48 167 295 1,065 1,039 536 726 265 89 175 12 44 1,719 54 201 355 1,108 1,065 654 885 305 106 199 3 44 1,898 103 268 324 1,202 1,202 696 942 342 125 217 3 44 2,180 83 313 379 1,405 1,350 830 1,095 20 0.2 475 494 152 (1) 646 20 591 611 116 (2) 726 20 680 700 187 (2) 885 20 782 802 142 (2) 942 20 935 955 142 (2) 1,095 FY10 FY11 FY12 FY13E FY14E
Key ratios
Y/E March Valuation Ratio (x) P/E (on FDEPS) P/E (on basic, reported EPS) P/CEPS P/BV Dividend yield (%) Market cap. / Sales EV/Sales EV/EBITDA EV / Total Assets Per Share Data (`) EPS (Basic) EPS (fully diluted) Cash EPS DPS Book Value DuPont Analysis (%) EBIT margin Tax retention ratio Asset turnover (x) ROCE (Post Tax) Cost of Debt (Post Tax) Leverage (x) Operating ROE Returns (%) ROCE (Pre-tax) Angel ROIC ROE Turnover ratios (x) Asset Turnover (Gross Block) Asset Turnover (Net Block) Operating Income / Invested Capital Inventory / Sales (days) Receivables (days) Payables (days) Working capital cycle (ex-cash) (days) Solvency ratios (x) Gross debt to equity Net debt to equity Net debt to EBITDA Interest Coverage (EBIT / Interest) 0.3 0.2 0.4 6.0 0.2 0.1 0.3 7.8 0.3 0.2 0.6 3.6 0.2 0.1 0.1 6.1 0.1 0.1 0.2 7.6 13.7 22.7 4.0 32 107 115 59 13.7 21.5 4.0 34 121 126 62 12.5 18.9 3.8 38 128 134 64 12.5 19.1 3.9 35 118 127 61 12.9 20.1 4.1 31 114 123 59 40.4 36.7 31.7 33.1 27.2 26.2 27.9 15.8 18.0 31.9 22.9 22.9 36.1 29.0 25.3 10.1 81.3 4.5 36.9 12.7 0.3 43.0 8.3 75.4 4.3 27.2 14.3 0.1 28.8 7.2 52.7 4.1 15.7 27.8 0.1 13.9 8.1 65.3 4.3 22.7 19.5 0.1 23.0 8.7 73.1 4.5 28.9 22.6 0.1 29.2 12.0 11.7 15.2 2.4 50.7 14.7 14.7 12.5 3.6 61.8 11.8 11.8 15.1 5.6 70.2 17.3 17.3 10.4 6.0 80.5 22.3 22.3 8.1 6.0 95.9 16.8 16.4 15.2 3.9 1.2 0.9 0.9 8.6 3.1 13.4 13.4 12.5 3.2 1.8 0.7 0.7 8.5 2.8 16.7 16.7 15.1 2.8 2.8 0.6 0.7 8.8 2.4 11.4 11.4 10.4 2.4 3.0 0.5 0.6 6.5 2.1 8.8 8.8 8.1 2.1 3.0 0.5 0.5 5.3 1.9 FY10 FY11 FY12 FY13E FY14E
E-mail: research@angelbroking.com
Website: www.angelbroking.com
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Disclosure of Interest Statement 1. Analyst ownership of the stock 2. Angel and its Group companies ownership of the stock 3. Angel and its Group companies' Directors ownership of the stock 4. Broking relationship with company covered
Bajaj Electricals No No No No
Note: We have not considered any Exposure below ` 1 lakh for Angel, its Group companies and Directors
Ratings (Returns):
10