Prabhudas Lilladher is bullish on Bajaj Electricals has recommended buy rating on the stock with a target price of Rs 605 in its research report dated November 05, 2020.
Prabhudas Lilladher's research report on Bajaj Electricals
We increase our FY21/22/23 earnings estimates by 37.3%/ 9.5%/ 3.7% and reiterate our positive stance on BJE given 1) Upsurge in demand for kitchen appliances and fans post pandemic 2) strong momentum in mass segment, more so in tier2/3 cities 3) guidance of 1% margin expansion in CP/year over the next few years and 4) strengthening of balance sheet aided by robust cash flows generation. EPC reported positive EBIT in 2Q aided by margin reversals due to non-UP project closures, although sustained recovery is sometime away and management expects operational profitability by 2QFY22.
We value the stock on SOTP and arrive at a target price of Rs605 (derived P/E of 23.1x on FY23 EPS, Consumer business valued at 24x). Maintain BUY.
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