Porinju Veliyath & Dolly Khanna Forum

Bajaj Electricals Ltd - BUY

CMP: Rs 315, 1 year Target: Rs 378, Upside: 20%

Bajaj Electricals (BJE) is well poised to leverage its strong brand equity and wide distribution network to capitalize on the growing consumer spending. We believe economic revival post demonetization, streamlined supply chain and strong order book in EPC will help BJE revert to its erstwhile growth of 13%+ (FY11-14). We expect 28% CAGR (FY16-19E) in net profit led by margin expansion in both the Consumer and EPC segments. Also, its asset light consumer business (almost 90% of products are outsourced) will ensure superior returns (ROCE- +30%). The stock trades at 21xFY18E and 16xFY19E; lower as compared to industry average of 31xFY18E and 25xFY19E. Valuing the company at 19xFY19E EPS; we recommend Buy with a target price of Rs 378.

IIFL

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