India Investment, Stocks, Credit Card and Retail Forum
Investments in Indian Equity and Research => Equity Investments, Fundamental Research and Sectors Review => MidCap Stock Picks => Topic started by: komal on March 16, 2016, 11:59:18 AM
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Here is a Quick and Short Review of Bajaj Electricals by Ambit Capital
We turn BUYers. Whilst BJE’s consumer franchise is relatively weak (losing market share across categories), we believe there is value. Supply chain is now getting stable (TOC now covers 35% of sales), hence this should lead to improvement in Range (more SKUs), Reach (more retailers) and Replenishment (more availability); we expect growth/EBITDA margin to recover in FY17. Despite the exit of E&P segment president (HOD), profitability should sustain given improved processes—apt site selection (close to centralized warehouses), stringent project monitoring and rational bidding (NIL YTD losses). Our implied target multiple of 19.8x for the consumer business implies 39%/28% discount to Havells/V-Guard’s multiple; further upgrade is subject to sustained double-digit margin, product portfolio upgrades and E&P business scale-down.