Bajaj Electricals Ltd., a renowned name in the Indian electrical industry, has been a pivotal player for over eight decades. With a strong foothold in diverse sectors such as lighting, appliances, and engineering projects, Bajaj Electricals has carved a niche for itself not just in the consumer durables market but also in large-scale infrastructure projects. Despite a volatile market, the company surged by 2.8% on September 6, making it a strong contender for investors looking for a robust midcap stock.
Founded in 1938, Bajaj Electricals has grown exponentially over the years. The company’s roots lie in its early ventures in the lighting and electrical appliances sectors, but it has expanded to encompass large-scale engineering projects, including the construction of transmission towers and telecom towers.
In this blog, we will take an in-depth look at Bajaj Electricals’ financial health, its potential as an investment, and its short and long-term growth prospects,let’s take a closer look at the balance sheet dashboard before diving into specific details.
Table of Contents
Bajaj Electricals: A Summary of Its Potential
Bajaj Electricals operates in three major sectors:
- Lighting: This includes a wide array of products such as lamps, tubes, and luminaires.
- Consumer Durables: From fans to kitchen appliances, Bajaj is a household name in India.
- Engineering and Projects: The company is heavily involved in building telecom towers, transmission line towers, and high-mast poles.
With 19 branch offices, a distributor network of over 1,000, and 282 customer care centers, Bajaj Electricals has an extensive reach across the country. Some of its notable projects include lighting for the Commonwealth Games stadium and the Bandra Worli Sea Link. The company has also expanded into renewable energy, with wind and solar energy initiatives.
Fundamental Analysis: Bajaj Electricals in Numbers
Sales, Net Profit, and Operating Profit (2018-2025 Predictions)
The chart provided paints a compelling picture of Bajaj Electricals’ financial trajectory. Sales over the years have hovered in the range of ₹4,500 crores to ₹6,600 crores, with a steady prediction of ₹4,917 crores by March 2025. The company has faced challenges, especially in FY 2020 when net profit plummeted to -₹10 crores. However, Bajaj has rebounded since, showing resilience with a projected net profit of ₹138.86 crores by March 2025.
Operating Profit Margin (OPM)
Bajaj Electricals has maintained a healthy OPM, with a significant rise in March 2023 to 7.67%. The forecast for March 2025 sees the OPM stabilizing at 6.5%, indicating robust operational efficiency despite fluctuations in the market.
Earnings Per Share (EPS)
Earnings per share are a critical indicator for investors, and Bajaj Electricals shows promise in this regard. In March 2020, EPS dropped to -₹0.82 but quickly recovered to ₹18.78 in March 2023. For March 2025, the EPS prediction stands at ₹12.06, signaling a positive growth outlook for shareholders.
Return on Equity (ROE)
Return on Equity reflects the company’s ability to generate profit relative to shareholders’ equity. Bajaj Electricals’ ROE peaked at 14.6% in March 2019 and saw a steady decline, bottoming out at -0.74% in March 2020. However, the current upward trend forecasts a healthy 9.37% ROE by March 2025.
Asset Distribution
Bajaj Electricals’ assets are well-distributed, with the majority allocated to other assets (₹2,819 crores). Other significant assets include ₹916 crores in fixed asstes and ₹63 crores in CWIP(Capital Work in Progress). This balance indicates that the company is investing in long-term growth, particularly through capital projects.
Liability Distribution
The company’s liabilities are primarily concentrated in strong reverses (₹1,418 crores) and other liabilities (₹2,177 crores), with borrowings accounting for ₹215 crores. The debt-equity ratio is well-aligned with industry standards, ensuring that Bajaj Electricals is on solid financial footing.
Stock Performance: Short-term and Long-term Targets
Current Stock Price: ₹1,004 (as on 06/09/2024)
PE Ratio: 91.5 (Higher than industry average, but reflective of growth potential)
Given the current financial health and market position, here’s a breakdown of potential stock targets:
- Short-term Target (3 months): ₹1,050 – ₹1,100
Bajaj Electricals is poised for modest short-term growth as it recovers from market volatility and capitalizes on its projects and product launches. - Long-term Target (12 months): ₹1,200 – ₹1,250
Over the longer term, the company’s stable asset base, growing EPS, and expanding OPM make it a solid choice for investors looking for steady returns. - Stop-loss: ₹950
This stop-loss limit is advisable for investors to minimize risks in case of sudden market downturns.
Conclusion: A Bright Future Ahead for Bajaj Electricals
Despite facing some market challenges, Bajaj Electricals has proven itself to be a resilient and forward-thinking company. Its strong asset base, diverse business model, and impressive financial recovery make it an excellent candidate for both short-term gains and long-term investment. The recent surge of 2.8% in the market is a testament to its potential, and the company continues to expand its presence in both the domestic and international markets.
With well-allocated assets and a strong balance sheet, Bajaj Electricals is poised for sustainable growth in the coming years. Investors looking for a solid midcap stock with a history of innovation and market adaptability should certainly consider adding Bajaj Electricals to their portfolio.
Frequently Asked Questions (FAQs)
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Disclaimer
This blog is for informational purposes only and should not be construed as financial advice. Always consult with a financial advisor before making investment decisions.
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