Bajaj Electricals Q4 Review - Heavy Discounting In Kitchen Appliances Impacts Performance: Yes Securities

Yes Securities Report

Bajaj Electricals Ltd.'s consumer products business registered revenue decline of 8% as kitchen appliances and GT (contributing 62% to revenue) has seen de-growth on muted demand and high discounting.

Fans and Morphy Richards have seen single digit growth with premium fans growing faster than the economy fans. Margins were impacted on account of lower gross margins which was marred by high discounting in the muted environment.

Bajaj Electricals had higher impact discounting as they had to clear old models by providing higher discounts as they have been aggressive in launching new models.

Lighting revenue decline was on account of LED price erosion in consumer lighting and higher base effect in professional lighting. Company expects Appliances to recover closer to festive season and margins would follow post that.

We have lowered our revenue estimates on increased competition and muted demand environment.

We continue to maintain our Neutral rating on the stock with target price of Rs 1,009 valuing the stock at 38 times.

Although the lead indicator that drives the consumption has been trending positive in Q4, we would however wait for the confirmation before we become constructive on the stock.

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