Buy This Small Cap Multibagger Consumer Durable Stock For Target Price Of Rs 1340: ICICI Direct

ICICI Direct has recently published a report on Bajaj Electricals Limited, where the brokerage suggests buy the stocks of the company for a target price of Rs 1340 apiece. If we consider this and the stocks are purchased at the current market price, it could fetch a potential return of 16% in 12 months.

Bajaj Electricals' business portfolio spans across consumer products (CP) and EPC (illumination, power transmission and power distribution). It is a small cap Household appliances company and has a pan India presence. The market cap of the company is Rs 13,280 crore.

Bajaj Electricals Business

CP (appliances, fans, lighting) contributes ~78% to the topline. Its premium brands include Morphy Richards and Nirlep. The company has over 2.3 lakh retail touch points across India. The company has been reducing exposure in the EPC business with maximum on executing high margin business.

Stock Outlook

On NSE, the Current Market Price (CMP) of the company is Rs 1,155.75 apiece after a jump of 1.35%. It's the 52-week low is Rs 8598.55 apiece recorded on 17th June 2022, and the 52-week high is Rs 1,588.95 apiece, recorded on 17th September 2021, respectively.

Returns On Investment

Stocks of the company over the past 1 week have declined roughly 0.49% and 1.75% in the past 1 month. Over the past 3 months and 1 year, it has given a positive return of 15.72% and 11.2%, respectively. While, over the last 3 and 5 years, it has given multibagger returns of 201.6% and 251.4%, respectively. In long-term investment tenure, the stock has performed well.

Q1FY23 Results

• Favourable base and price hike help drive margins in Q1; new launches and market share gains drive topline.
• Revenues were up 43% YoY to Rs 1229 crore on a favourable base and new product launches in the consumer product segment. Consumer product revenue increased 58% YoY to ~ Rs 973 crore.
• EBITDA margin was up 602 bps YoY (135 bps QoQ) to 6.1% supported by price hikes and improved operating leverage.
• BEL reported PAT of Rs 42 crore against a loss of Rs 25 crore in Q1FY22 led by improved EBITDA margins and topline growth in Q1FY23.

Brokerage suggests buy for a target price of Rs 1340

Bajaj Electricals' share price has grown to 3.5x over the past five years (from ~Rs 332 in August 2017 to ~Rs 1144 in August 2022). "We revise our rating from HOLD to BUY on the stock. Bajaj Electrical (BEL) at Rs 1340 using SOTP i.e.45x and 6x PE for CP and EPC respectively on FY24E EPS each," the brokerage said.

About - Bajaj Electricals Limited

Bajaj Electricals Limited (BEL) is a globally renowned and trusted company and is a part of the Bajaj Group. Bajaj Electricals' business is spread across - Consumer Products (Appliances, Fans, Lighting), Exports, and EPC (Illumination, Transmission Towers and Power Distribution). With 20 branch offices and approximately 500 customer care centres. The company has a presence in premium home appliances and cookware segments with brands like Morphy Richards and Nirlep.

To increase its footprint globally and in India, the company partnered with reputed brands from across the world to give customers the best possible services. BEL has marketing arrangements with Securiton of Switzerland for Luminaires, Delta Controls of Canada for Integrated Building Management Systems, Greystone of Canada and Magnum Energy of the USA for Wired and Wireless Sensors, DiUSA and Midea of China for Fans, and Morphy Richards of UK for Appliances. Bajaj Electricals has also invested in Starlite Lighting for manufacturing energy-saving lamps (CFL).

Disclaimer

The stock has been picked from the brokerage report of ICICI Direct. Greynium Information Technologies, the Author, and the respective Brokerage House are not liable for any losses caused as a result of decisions based on the article. Goodreturns.in advises users to check with certified experts before taking any investment decision.