Accumulate Bajaj Electricals; target of Rs 656: Prabhudas Lilladher

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26 Aug, 2025 12:21

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We downward revise BJE FY26/27 earnings by 22.5%/6.8% to factoring in the weak Q1FY26 performance, high brand investments, lower-than-expected growth in the Fans & Air Coolers, and a modest performance in the lighting segment .CP segment decline by 10.8% YoY (accounted for 76% revenue), driven by weak performance in fans and air coolers due to erratic weather, while kitchen appliances and water heaters witnessed strong growth. EBIT margins contracted by 420bps due to weak seasonal product performance, high brand investments and operating cost. Lighting revenue grew 3.1%, driven by mid-single digit growth in consumer lighting , supported by professional lighting. BJE has entered into switchgear business under lighting segment, expecting synergies by leveraging the existing go-to-market network. BJE expects a stronger recovery ahead but remains cautious across segments, with ongoing restructuring of products under the Nirlep brand.

We estimate FY25- 27E revenue/EBITDA/PAT CAGR of 9.2%/17.6%/37.9%. We value stock at 35x FY27 EPS and arrive at TP of Rs656 (earlier Rs703). Upgrade to “Accumulate” from ‘HOLD’ rating.

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