Bajaj Electricals Eyes Margin Expansion Amid Cost Optimisation: PL Capital Retains ‘HOLD’

Mumbai | May 13, 2025 – Prabhudas Lilladher has reiterated its ‘Hold’ rating on Bajaj Electricals Ltd (BJE) post the company’s Q4FY25 earnings, while revising the target price to ₹641 from ₹552 earlier. The upgrade comes on the back of sustained revenue growth in the consumer products segment, improving margin profile, and strategic cost-efficiency initiatives that support the company’s profitability outlook over the next few years.

In Q4FY25, The company reported a 6.5% year-on-year growth in revenue to ₹12,655 million, largely led by a robust 8.4% growth in its Consumer Products (CP) segment, which now contributes 79% of total revenues. Growth was fuelled by strong performance in coolers, domestic appliances, and Morphy Richards, though fans saw only low single-digit growth. The Lighting segment remained flat, with a 0.2% YoY uptick, primarily due to execution delays in professional lighting projects. Despite this, EBITDA rose sharply by 87% YoY to ₹930 million, while PAT jumped 28.6% to ₹377 million.

Key Financials at a Glance

Analyst Insights & Concall Highlights
In the Q4FY25 earnings call, the management reiterated its strategic focus on driving margin expansion and operational efficiency. The company maintained guidance for Consumer Products (CP) EBIT margin of 6% in FY26, with a clear roadmap to achieve double-digit EBIT margin over the next three years. Gross margins are expected to improve through a combination of VAVE (Value Analysis and Value Engineering) initiatives and targeted price hikes, each contributing a projected 2–3% cost savings.

Marketing and brand investments continue to be a priority, with ad spends expected to increase to 3.5–4% of revenues in FY26, up from 3% in FY25. The sales mix remains healthy with 45% coming from alternate channels (including e-commerce and modern retail) and 55% from general trade.

The company also disclosed a one-time gain of ₹301.3 million from liquidation of immovable properties, which aided bottom-line performance. Additionally, BJE announced a proposed capex of ₹1 billion and has secured board approval for a ₹3 billion investment in a new manufacturing facility, further underlining its long-term growth ambitions. A dividend of ₹3 per share was also proposed for the fiscal.

The Bottom Line

PL Capital maintains a cautious but optimistic stance on Bajaj Electricals. With improving gross and EBITDA margins, and targeted operational efficiencies, the company’s medium-term profitability outlook looks promising. However, at the current market price of ₹610, near the revised target price of ₹641, the risk-reward appears balanced, justifying the ‘Hold’ recommendation.

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Disclaimer: The views and investment tips expressed by investment experts at PL Capital are their own. Investors are advised to consult certified financial advisors before making any investment decisions.