..

.. Visit Note @ Dalal & Broacha

..
..
Dalal & Broacha
Stock Broking Pvt. Ltd. ..
Bajaj Electricals Ltd.
Umesh Gupta (Analyst)
Jan 19, 2010 umesh.gupta@dalal-broacha.com
(022) 2282 2992 Ext. : 147
Milind Karmarkar (Head Research)
(022) 6630 8667
Raj Mehta (Equity Sales)
(022) 3290 3017

BUY Bajaj Electricals Ltd. is a high growth company (last 5 yr sales CAGR is 30%, PAT
Current Price Rs 876 CAGR is 51%) trading at ~10x its FY11E earnings, its recent earnings have grown at
Target Pri ce Rs 1282 62% and 152% in Q1FY10 and Q2FY10 respectively. The company has grown at
% upside 46%
these high rates without saturating any of its markets, with market share ranging
52 Week Range Rs.1485 / Rs .331
between 15-30% implying significant future growth opportunities.

Key Share Data The company generates significant cash to sustain its operations thereby
Market Cap Rs.16.9 BN/$352.9 MN curtailing the need to raise capital which helps in generating high returns on
EV / Sales 0.8 capital (Average ROE of 40% over the last 4 years). However, the company has
EV / EBIDTA 7.4 recently done a QIP at Rs.785 per share to raise Rs.1600 mn, which would be used
1mth avg. daily vol. Rs.14.5 mn/$0.3 mn as growth capital (hinting acquisitions).
No.of Shrs o/s in MN 19.3
Book Value 265.1
Bajaj Electricals operates in three divisions, Consumer Durables (Brown goods),
BSE / NSE 500031 / BAJAJELEC
Engineering & Projects (High Mast, Poles, Towers, Rural Electrification) and Lighting
Reuters BJEL.BO
Bloomberg BJE IN Equity (Lamps, CFLs, LED, Street Lighting).

All three businesses are a play on India growth story: All the three divisions have been
Share holding (%)
growing at very healthy growth rates of 20-35% CAGR over the last 5 years and are
Period Dec''09 Sep'09
highly scalable with future growth rates expected to be ~20-25% as they are proxy
Promote rs 65.7 73.5
MF/Ba nks /Fi s 18.1 10.1 on various growth themes of India such as Consumer Discretionary, Power
FI Is 2.2 1.3 Generation, Transmission, Distribution, Industrial Capex, Retail, Infrastructure
Publ i c & Othe rs 14.1 15.2 etc.
Total 100.0 100.0
Valuations: There aren't any direct comparable companies to Bajaj Electricals,
400 however If we look at the various businesses of the company and compare them
350 with the sectoral valuations, Bajaj Electricals is trading at the lowest end of the
300 valuations.
250
200
The consumer focused companies with similar returns profile are trading at P/E
150
of ~20-25x while the power and industrial capex related companies are trading at
100
50
P/E of ~12-18x and P/BV of 3-5x.
0
-50 Bajaj Electricals is trading at P/E of ~10x FY11E and P/BV of ~2.5x. Considering the
returns profile of the company and expected growth rates, we believe the stock is
Bajaj Electricals SENSEX undervalued. Recommend Buy.

Year Net Sales %growth EBIDTA OPM% PAT %growth EPS PE(x) RoE% RoCE%
FY08 13,815.9 27.2 1,432.1 10.4 731.2 86.8 42.3 20.7 50.1 35.0
FY09 17,779.7 28.7 1,797.4 10.1 893.5 22.2 51.7 17.0 42.6 39.0
FY10E 21,271.8 19.6 2,240.9 10.5 1,295.6 45.0 67.0 13.1 34.2 36.1
FY11E 25,907.7 21.8 2,749.3 10.6 1,638.6 26.5 84.7 10.3 28.1 33.2
Dalal & Broacha Research is available on Bloomberg DBVS<GO>

1
 Bajaj Electricals Ltd.
Dalal & Broacha
Stock Broking Pvt. Ltd.

Investment Case:
Increase in availability of Power: We believe, consumer goods companies will be the major
beneficiaries of the huge power generation expansion programme of govt. of India coupled with
Rural Electrification. As most families do not buy consumer goods due to lack of electricity and
high cost of electricity. With huge power generation addition, both these problems could be
solved and due to other factors such as increase in income levels of Indian middle class and
energy efficient consumer products, we believe the consumer goods market is set to explode.

Increase in income level: Per capita GDP (at constant prices) in India has grown from approximately
Rs. 12,900 for the fiscal year ended March 1991 at the time of liberalization to approximately Rs.
27,400 for the fiscal year ended March 2008. This increase in per capita income has created
increasing wealth and has had a significant investment multiplier effect on the economy, leading
to increasing consumerism and positively impacting savings.

Growing middle class: India has a large and rapidly growing young middle class with increasing
levels of discretionary income available for consumption and investment purposes. The last five
years have seen not only a great expansion of the Indian economy but also of consumer credit.

Energy Efficiency Ratio: Energy Efficiency Ratio (EER) of products has become a key determent in the
saleability and marketability of consumer durables, due consumer concerns about inflation and
..
soaring energy bills, leading them to prefer appliances which offer energy-efficiency. Although

..
currently it is not mandatory by law to state the EER of a product, this is likely to become compulsory

..
over the forecast period, especially for air conditioners, refrigerators, fans and later on other
domestic appliances.
..
..
Availability of Consumer Finance: The increasing popularity of easily available consumer loans and
the expansion of hire purchase schemes will give a moral boost to the price-sensitive consumers.
The attractive schemes of financial institutions and commercial banks are increasingly becoming
suitable for the consumer. Consumer goods companies are themselves coming out with attractive
financing schemes to consumers through their extensive dealer network. This has a direct bearing
on future demand.

Rural Markets: The majority of the Indian population that lives in its villages could become a
source of very high demand for consumer goods companies, As and when banks and financial
institutions start penetrating deeper into rural India. With growth in disposable income, improving
lifestyles, power availability, low running cost, and rise in temperatures, we believe Rural India
could become a major growth driver for Consumer goods companies.

Established track record and brand name: Bajaj Electricals has been present in the electrical products
industry for several years, which, has helped it in understanding the changing needs and demands
of customers in India. With constant improvement in performance of its products, augmented
with quality and recognition of its brand, the company enjoys considerable brand equity and
reliability in the market.

2
 ..
..
.. Bajaj Electricals Ltd.
..
Dalal & Broacha
Stock Broking Pvt. Ltd. ..
Business Overview:
Bajaj Electricals operates in three divisions, Consumer Durables (Brown goods), Engineering &
Projects (High Mast, Poles, Towers, Rural Electrification) and Lighting (Lamps, CFLs, LED, Street
Lighting).

All the three divisions have been growing at very healthy growth rates of 20-35% CAGR over the last
5 years and are highly scalable with future growth rates expected to be ~20-25% as they are proxy
of various growth themes of India such as Consumer Discretionary, Power Generation, Transmission,
Distribution, Industrial Capex, Retail, Infrastructure etc.

Rs mn FY05 FY06 FY07 FY08 FY09 CAGR

Appl i a nces 1410.0 1940.0 2600.0 3630.0 4640.0 35%
Fa ns 1090.0 1410.0 1850.0 2410.0 2950.0 28%
Li ghti ng 1000.0 1090.0 1340.0 1760.0 2090.0 20%
Lumi na i res 1210.0 1550.0 1930.0 2300.0 2820.0 24%
Engi neeri ng & Projects 1780.0 2450.0 3050.0 3630.0 5230.0 31%
Total Revenues 6490.0 8440.0 10770.0 13730.0 17730.0 29%
EBIDTA 418.6 677.5 869.4 1432.1 1797.4 44%
PAT 138.5 284.8 385.6 731.2 893.5 59%

Well diversified revenue mix across high growth verticals:

100 %
9 0%
27% 29 % 28 % 26 % 2 9%
8 0%
7 0%
19% 18 % 18 % 17 % 1 6%
6 0%
5 0% 12 % 13 % 1 2%
15% 13 %
4 0%
17 % 18 % 1 7%
3 0% 17% 17 %
2 0%
1 0% 22% 23 % 24 % 26 % 2 6%
0%
FY05 FY06 FY07 FY0 8 FY0 9

A pplianc e s Fans Lighting Luminaire s Engine e ring & Proje c ts

3
 ..
..
.. Bajaj Electricals Ltd.
..
Dalal & Broacha
Stock Broking Pvt. Ltd. ..
Consumer Durables:
The company markets various household ranges of products in its appliances division. Bajaj
Electricals is one of the leading player for products such as irons, OTGs, water heaters, toasters
and sandwich makers and air coolers under its own brand name and under the brand name of
"Morphy Richards" (which is one of the largest players in the home appliances market in the
United Kingdom). The company markets irons, toasters, OTGs, electric kettles, coolers, room
heaters, storage water heaters, instant water heaters, immersion heaters, microwave ovens,
mixers, food processor, emergency light, coffee makers, DVD players, gas stoves, gas hobs, cooker
hoods, rice cookers, water filters and vacuum cleaners under the "Bajaj" brand. And it markets
mixer grinders, juicer mixer grinders, juicers, toasters, steam irons, dry irons, electric cookers,
coffee makers, electric kettles, hand blenders, OTGs, hair dryers and portable heaters under the
"Morphy Richards" brand.

In the fans business, the company's products include ceiling, table, pedestal and wall mounted
fans, industrial and domestic exhaust fans, air circulators, personal fans, children's fans, cooler
kits and pumps. The company manufactures fans and related components at its Chakan unit, and
also procure fans and related components from its vendors located at Hyderabad, Himachal
Pradesh and Uttarakhand and imports from China. The company has also executed an agreement
with Midea , to sell and market table, pedestal and wall mounted fans under the joint brand
name of "Bajaj-Midea", and has also entered into an agreement with Walt Disney for the sale
and marketing of children's fans using Disney characters and designs.

Domestic Fan Industry:

India being a tropical country, electric fans are an essential utility for more than six months of the
year in most parts of the country. The Indian market is estimated at 2.5 million fans per month and
it is growing at about 10% per annum (Source: Indian Fan Manufacturers Association).Bajaj Electricals
sold nearly 3.2 mn fans in FY09 against 2.7mn fans in FY08.

The market is divided among ceiling, pedestal, wall and table fans. Industrial and exhaust fans
are another important segment. The boom in construction industry has been a boon to the electrical
fan industry, coupled with rural electrification bringing in new set of customers thereby expanding
the market.

4
 ..
..
.. Bajaj Electricals Ltd.
..
Dalal & Broacha
Stock Broking Pvt. Ltd. ..
Lighting & Luminaires:
Under this division the company markets various products ranging from GLS lamps, FTLs, CFLs, and
LED torches, among other products. A major portion of the electrical lamps and tubes marketed by
the company are manufactured by Hind Lamps Limited, a Bajaj Group company. Majority of
company's CFL lamps are manufactured by Starlite Lighting Limited. With respect to lamps, tube
lights, and torches, the company is viewed as one of the leading brands in terms of price and
image in India.

Company's luminaires division is engaged in industrial, commercial, decorative and street lighting,
commissioning and marketing of flood lights, light emitting diodes, lighting electronics, lighting
controls, mercury and sodium vapour lamps, metal halide lamps and compact florescent lamps.
Bajaj Electricals is one of the leading players in the market for street lights, flood lights and
industrial lighting applications.

Under this SBU the company markets various luminaire products, which include decorative
luminaires in various sizes and design for information technology parks, offices, banks and
shopping mall applications, CFL down lighter luminaires with dimming solutions, luminaires for
auditorium, conference room and art gallery lighting, industrial lighting applications, sports
lighting applications, roadway lighting applications, hazardous area lighting, street lighting
products, energy conservation concepts and allied accessories. Luminaires products are sourced
from dedicated vendors and through imports from China.

The company has recently forayed into a distribution relationship with Delta Controls of Canada
for Building management systems and HVAC products and with Securiton of Switzerland for Fire
alarms and Security systems.

Engineering and Projects (E&P):

E&P business can be broadly categorised into three divisions, namely, (a) special projects, where
it undertakes turnkey lighting assignments, fibre optic lighting, factory lighting, air-port lighting,
sports lighting and rural electrification projects, among others, (b) high masts and street lighting,
where it undertakes design, supply, erection and commissioning of high masts, signages and
poles, and (c) towers, where it undertakes design, supply, erection and commissioning of
transmission lines, telecommunication towers and monopoles, and other related products and
services.

The company carries out galvanizing, fabrication and manufacture of high masts, lattice towers at
its Ranjangaon unit, which has a state of the art galvanizing plant.

5
 ..
..
.. Bajaj Electricals Ltd.
..
Dalal & Broacha
Stock Broking Pvt. Ltd. ..
Consumer Durables Industry Overview:
Most of the segments in the consumer goods sector are characterized by intense competition,
emergence of new companies and introduction of state-of-the-art models, price discounts and
exchange schemes. Multi-national companies continue to dominate the Indian consumer durable
segment. In consonance with the global trend, over the years, demand for consumer durables has
increased with rising income levels, double-income families, changing lifestyles, availability of
credit, increasing consumer awareness and introduction of new models.

The consumer durables market in India was estimated to be around USD 4.5bn in 2006-07. More
than 7mn units of consumer durable appliances have been sold in the year 2006-07 with colour
televisions (CTV) forming the bulk of the sales with 30 per cent share of volumes. CTV, Refrigerators
and ACs together constitute more than 60 per cent of the sales in terms of the number of units
sold.

Branded goods account for 10 per cent of the total consumer goods market in India, while organized
retailing is around 2 per cent of the total industry. Though branded products are perceived to be
costlier than non-branded products, the penetration of branded products is increasing. The relative
shares of branded products and organised retail indicate that a significant share of branded
products is being sold through unorganised channels. This highlights the need for a strong
distribution network to penetrate deeper into the potential market.

Domestic Electrical Appliances Industry Overview:

Brown goods or domestic kitchen appliances are indicators of the changing consumer scenario in
post-liberalisation economic environment. The major products constituting the brown goods
market are mixers, grinders, irons, microwave-ovens, rice cookers, water heaters or geysers, electric
fans and exhausts.

The branded brown goods market has expanded at a significant pace and is expected to retain
the momentum into the future as well. The market has been transformed by the entry of over a
dozen new brands, moreover competition has intensified. While focus on price competency remains
a key priority, players have also started focusing on other product features such as safety and
total cost of ownership of the device.

Goods, like the rice cooker have been continuously growing in a slow and steady manner over a
significant period of time, while microwave ovens have grown exponentially after the initial
period of customisation to local requirements. The electrical iron market can be divided into two
segments: heavy and light-weight.

The market is also segmented into two sub-segments: steam and non-steam irons. India being a
tropical country, electric fans are an essential utility for more than six months of the year in most
parts of the country. The present market size is estimated at around 11.6mn pieces. The market is
divided among ceiling, pedestal, wall and table fans. Industrial and exhaust fans are another
important segment.

The electrical appliances industry, which had been focused on the urban market, is now reaching
out to semi-urban and rural markets as well, because of the shift in living style of the population,
increasing electrification of villages and relatively higher purchasing power of consumers. As the
market penetrates into the core middle class segment in both urban and rural areas, it is expected
to expand phenomenally, offering large volumes to the industry.
6
 ..
..
.. Bajaj Electricals Ltd.
..
Dalal & Broacha
Stock Broking Pvt. Ltd. ..
Key factors affecting various businesses of the company:
Raw Material Costs and Availability: The key raw materials include Zinc and steel used in the
manufacturing of products of the Engineering & Projects SBU and aluminium and copper which are
used in products of Consumer durables and lighting segment. In the Engineering and Projects SBU
typical business cycle range anywhere between 4-6 months for the highmast & poles business,
12-18 months for special projects business and upto 24-30 months for the transmission line
towers business. Highmast and poles contracts and special projects contracts are generally fixed
price contracts, which expose the company to the risk in fluctuations in the raw material prices.

In case of consumer durables and lighting segment, the company enters into outsourcing contracts
with various third party vendors to manufacture the goods designed and developed by the company.
In case of these contracts any fluctuation in the raw material prices has to be made good by the
company to the vendors which indirectly exposes the company to the risk in upward fluctuation in
raw material prices.

Product Mix: The company's product mix also affects its financial results. The breadth of the
product range gives the company the flexibility to adapt the product mix to market demands and
to maximize margins. The company intends to increase the proportion of high margin and high
value products in the product mix so as to better withstand market dynamics and to offer a broad
range of products to meet the growing requirements of customers.

Government policies, budgetary allocations and capital expenditure plans of public sector companies
particularly in the infrastructure sector: Demand for Engineering & project business is primarily
dependent on sustained economic development and government policies relating to infrastructure
development. It is also significantly dependent on budgetary allocations made by governments
to these sectors, as well as funding provided by Indian, international and multilateral development
finance institutions for development of such sectors. Investments by the private sector companies
in infrastructure projects are dependent on the potential returns from such projects and are
therefore linked to government policies relating to private sector participation and the sharing of
risks and returns from such projects.

Outsourcing arrangements with Vendors: In the consumer durables and Lighting Business unit, the
company also operates on the outsourcing model, wherein it outsource the manufacturing of
some of the products to third party vendors, In the event, its suppliers/vendors are unable to
supply the products / components that are sourced from them in sufficient quantities or there is
a loss of one or more significant suppliers/vendors, its ability to obtain products/ components
and/or at competitive rates could adversely affect its perfomance.

Competition: Bajaj Electricals compete with players both in the organised and unorganised segment.
It faces competition from both domestic and foreign manufacturers for its consumer durables and
Lighting business. In order to compete effectively, the company continues to focus on enhancing
revenue growth through introduction of new products, expansion of the dealer and retailer network,
along with good brand building efforts in addition to the taking measures for effective cost
control, value engineering, competitive sourcing and improving credit discipline.

However, certain of its competitors may be larger than it in terms of production capacity and/or a
more extensive global operation, and may benefit from greater economies of scale and operating
efficiencies. Company’s failure to compete effectively with such manufacturers may have an adverse
effect on its business, financial condition and results of operations.
7
 ..
..
.. Bajaj Electricals Ltd.
..
Dalal & Broacha
Stock Broking Pvt. Ltd. ..
Valuation:

In the absence of direct comparable peers we have compared the valuations of diffrent companies
which are either present in consumer goods or capital goods businesses.

We initiate the coverage with a BUY recommendation and a 12 month target price of Rs. 1276 based
on our Weighted Average Target Price model.

Weighted average target price Weighted

Ta rget Weight avera ge
Methodol ogies pri ce a s s igned price Comments
Ta rget pri ce us ing DCF a pproa ch 1,281.1 40.0% 512.5 Ba s ed on DCF
Ta rget pri ce us ing EV/EBITDA 1,293.0 30.0% 387.9 Bs a ed on 9x EV/EBIDTA FY11E
Ta rget pri ce us ing P/E a pproa ch 1,271.0 30.0% 381.3 Bs a ed on 15x P/E FY11E
Weighted average target price 1,281.7
Current price 876.0
Ups i de/(downs ide) from current 46.31%

EV/EB ID TA m ethod
F igures (R s m n) F Y09 EV/EB ID TA
Com pany Price Sales EB ID TA OPM PAT PAT % F Y10E F Y11E
H a ve l l s * 520.0 21,983.0 2,033.0 9.2 1,452.0 6.6 12.0 9.6
Cro m p to n G re a ve s 400.0 87,372.0 9,955.0 11.4 5,625.0 6.4 12.4 11.3
V o l ta s 160.0 43,617.0 3,189.0 7.3 2,545.0 5.8 15.7 13.1
B a ja j El e ctri ca l s 876.0 17,779.7 1,797.4 10.1 893.5 5.0 8.3 6.8

Average EV/EB ID TA 12.1 10.2

V a l u a ti o n m e tri cs
Target EV/EB ITD A m ultiple 9.0
2011E EB I TD A 2,749.3
2010E EV 24,743.3
2010E D e b t 2,138.5
2010E Ca s h 2,399.3
2010E M a rk e t Ca p . 25,004.0
N o . o f s h a re s 19.3
Target Price 1,293.0

CMP 876.0
U p s i d e / (D o w n s i d e ) 47.6
*H av ells num bers are taken as standalone for com pariosn purpose
P/E m ethod
F igures (R s m n) EPS P/E
Com pany Price F Y09 F Y10E F Y11E F Y10E F Y11E
H a ve l l s * 520.0 24.1 33.2 39.9 15.6 13.0
Cro m p to n G re a ve s 400.0 15.3 19.1 22.9 20.9 17.5
V o l ta s 160.0 7.7 9.7 11.6 16.5 13.8
B a ja j El e ctri ca l s 876.0 46.2 67.0 84.7 13.1 10.3

Average P/E 16.5 13.7

V a l u a ti o n m e tri cs
Target P/E m ultiple 15.0
2011E EPS 84.7
Target Price 1,271.0
CMP 876.0
U p s i d e / (D o w n s i d e ) 45.1
*H av ells num bers are taken as standalone for com pariosn purpose

8
 ..
..
.. Bajaj Electricals Ltd.
..
Dalal & Broacha
Stock Broking Pvt. Ltd. ..
DCF Valuation:
Year FY08 FY09 FY10E FY11E FY12E FY13E FY14E FY15E FY16E
EBIT 1357.6 1711.9 2148.0 2645.7 3264.2 3753.8 4316.8 4964.4 5709.0
Effective tax rate (33.6) (33.6) (33.6) (33.6) (33.6) (33.6) (33.6) (33.6) (33.6)
EBIT*(1‐tax rate) 901.4 1136.7 1426.2 1756.7 2167.4 2492.5 2866.4 3296.3 3790.8
Depreciation/Amortisation 74.5 85.5 92.9 103.5 127.8 146.9 169.0 194.3 223.4
Change in working capital (512.5) (101.5) (676.7) (821.3) (937.0) (983.9) (1033.1) (1084.7) (1138.9)
Capex (76.4) (104.7) (200.0) (200.0) (200.0) (200.0) (200.0) (200.0) (200.0)

‐FCFF 387.0 1016.0 642.5 839.0 1158.1 1455.6 1802.3 2205.9 2675.3
-FCF Growth Rate 163% -37% 31% 38% 26% 24% 22% 21%
-Cost of Capital (%) 11.4% 11.4% 11.4% 11.4% 11.4% 11.4% 11.4%
-Weight Assigned 0.3 1.3 2.3 3.3 4.3 5.3
-Present Value 812.2 1006.4 1135.3 1261.7 1386.2 1508.9

Sum of PV of FCFF 7110.7

Terminal value calculation
Terminal Growth rate (g) 4.0%
Terminal Year Free Cash Flow 2782.3 WACC
Terminal value 32137.2 Terminal (g 10.7% 11.7% 12.7% 13.7% 14.7%
PV of Terminal Value 17087.5 2.0% 1362.4 1222.7 1115.3 1023.7 948.1
3.0% 1487.8 1317.5 1189.6 1082.5 995.3
Enterprise Value 24198.2 4.0% 1650.5 1437.0 1281.1 1153.4 1051.4
Less: Debt (2138.5) 5.0% 1870.3 1592.2 1396.5 1240.7 1119.1
Add: Cash & Investments 2714.9 6.0% 2183.6 1801.7 1546.6 1350.8 1202.4
Market Capitalisation 24774.6
No. of shares 19.3
Value per share 1281.1

Calculation of WACC

WACC for explicit forecast WACC for terminal growth

Expected Market Return (Rm) 15.0% Expected Market Return (Rm) 15.0%
Risk Free Rate (Rf) 7.0% Risk Free Rate (Rf) 7.0%
Country Premium (Rm-Rf ) 8.0% Country Premium (Rm-Rf ) 8.0%
Beta 0.80 Beta 0.80
Cost of Equity 13.4% Cost of Equity 13.4%
Cost of Debt 10.0% Cost of Debt 9.0%
Tax rate 33.6% Tax rate 33.6%
Post Tax Cost of Debt 6.6% Post Tax Cost of Debt 6.0%
WACC 11.4% Long term debt to capital ratio 10.0%
WACC 12.7%
Debt 2138.5
Equity 5126.6 Terminal Growth Rate 4.0%
Total 7265.1 Terminal Year Free Cash Flow 2782.3
Terminal Enterprise Value 32137.2
Weight Assigned 5.3
Terminal Value 17087.5

9
 ..
..
.. Bajaj Electricals Ltd.
..
Dalal & Broacha
Stock Broking Pvt. Ltd. ..
Historical PE Chart:

10
 ..
..
.. Bajaj Electricals Ltd.
..
Dalal & Broacha
Stock Broking Pvt. Ltd. ..
Quaterly Results:
Particulars Q2F Y10 Q2F Y09 % chg Q1F Y10 Q1F Y09 % chg H 1F Y10 H 1F Y09 % chg
Ne t Sa l e s 5121.4 3785.7 35.3 3653.8 3175.8 15.1 8775.2 6961.5 26.1
O th e r O p e ra ti n g I n co m e 0.0 0.0 0.0 0.0 0.0
Total Incom e 5121.4 3785.7 35.3 3653.8 3175.8 15.1 8775.2 6961.5 26.1

R a w Ma te ri a l s (3651.5) (2859.5) 27.7 (2606.4) (2289.3) 13.9 (6257.9) (5148.8) 21.5

S ta ff Co s t (305.8) (234.1) 30.6 (199.3) (166.6) 19.6 (505.1) (400.7) 26.1
O th e r Exp e n d i tu re (617.6) (398.9) 54.8 (491.2) (468.9) 4.8 (1108.8) (867.8) 27.8
Total Ex penditure (4574.9) (3492.5) 31.0 (3296.9) (2924.8) 12.7 (7871.8) (6417.3) 22.7

PB ID T 546.5 293.2 86.4 356.9 251.0 42.2 903.4 544.2 66.0

D e p re ci a ti o n (23.7) (19.9) 19.1 (21.8) (18.9) 15.3 (45.5) (38.8) 17.3
PB IT 522.8 273.3 91.3 335.1 232.1 44.4 857.9 505.4 69.7
O th e r I n co m e 6.7 8.2 (18.3) 1.9 5.2 (63.5) 8.6 13.4 (35.8)
I n te re s t (85.1) (98.1) (13.3) (85.6) (80.1) 6.9 (170.7) (178.2) 0.0
PB T 444.4 183.4 142.3 251.4 157.2 59.9 695.8 340.6 104.3
Ta xe s (152.6) (68.0) 124.4 (87.3) (56.2) 55.3 (239.9) (124.2) 93.2
Profit After Tax 291.8 115.4 152.9 164.1 101.0 62.5 455.9 216.4 110.7
Exce p ti o n a l I te m s 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Profit After Tax 291.8 115.4 152.9 164.1 101.0 62.5 455.9 216.4 110.7

EPS 15.1 6.7 126.1 8.5 5.8 45.3 23.6 12.5 88.4
Eq u i ty 193.4 172.9 11.8 193.4 172.9 11.8 193.4 172.9 11.8
F a ce Va l u e 10.0 10.0 0.0 10.0 10.0 0.0 10.0 10.0 0.0

O PM 10.7 7.7 292.6 9.8 7.9 186.4 10.3 7.8 247.8

N PM 5.7 3.0 264.9 4.5 3.2 131.1 5.2 3.1 208.7
Ta x R a te (34.3) (37.1) 273.9 (34.7) (35.8) 102.5 (34.5) (36.5) 198.7

Exp e n s e s A n a l ys i s (% o f S a l e s )
R a w Ma te ri a l s (71.3) (75.5) (423.5) (71.3) (72.1) (75.2) (71.3) (74.0) (264.8)
S ta ff Co s t (6.0) (6.2) (21.3) (5.5) (5.2) 20.9 (5.8) (5.8) 0.0
O th e r Exp e n d i tu re (12.1) (10.5) 152.2 (13.4) (14.8) (132.1) (12.6) (12.5) 17.0
To ta l Exp e n d i tu re (89.3) (92.3) (292.6) (90.2) (92.1) (186.4) (89.7) (92.2) (247.8)

S egm ental R esults

Particulars (R s. In Mn) Q2F Y10 Q2F Y09 % chg Q1F Y10 Q1F Y09 % chg H 1F Y10 H 1F Y09 % chg
S egm ent R evenue
Li g h ti n g 1396.3 1214.8 14.9 736.5 870.5 (15.4) 2132.8 2085.3 2.3
Co n s u m e r D u ra b l e s 2161.2 1685.4 28.2 1886.0 1738.6 8.5 4047.2 3424.0 18.2
En g i n e e ri n g & Pro je cts 1556.5 885.5 75.8 1029.2 564.3 82.4 2585.7 1449.8 78.3
Le s s : S e g m e n t R e s u l ts 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
N et S ales 5121.4 3793.2 35.0 3653.8 3175.8 15.1 8775.2 6969.0 25.9

S egm ent R esults

Li g h ti n g 100.9 97.3 3.7 4.5 27.8 (83.8) 105.4 125.1 (15.7)
Co n s u m e r D u ra b l e s 249.8 129.4 93.0 232.0 171.3 35.4 481.8 300.7 60.2
En g i n e e ri n g & Pro je cts 174.3 76.0 129.3 100.2 59.0 69.8 274.5 135.0 103.3
Total 531.6 306.9 73.2 335.5 257.1 30.5 867.1 564.0 53.7
Le s s : I n te re s t Exp e n s e (N e t) (85.1) (97.3) 0.0 (85.6) (80.1) 0.0 (170.7) (177.4) (3.8)
Le s s : U n a l l o ca b l e I n co m e / (Exp (2.1) (17.9) (88.3) 0.0 (19.7) (100.0) (2.1) (37.6) (94.4)
A d d : Oth e r I n co m e 0.0 0.0 0.0 1.5 0.0 0.0 1.5 0.0 0.0
PB T 444.4 191.7 131.8 251.4 157.3 59.8 695.8 349.0 99.4

PB IT Margin
Li g h ti n g 7.2 8.0 0.6 3.2 4.9 6.0
Co n s u m e r D u ra b l e s 11.6 7.7 12.3 9.9 11.9 8.8
En g i n e e ri n g & Pro je cts 11.2 8.6 9.7 10.5 10.6 9.3

11
 ..
..
.. Bajaj Electricals Ltd.
..
Dalal & Broacha
Stock Broking Pvt. Ltd. ..
FINANCIALS
P&L (Rs mn) FY08 FY09 FY10E FY11E Cash Flow St. (Rs. mn) FY08 FY09 FY10E FY11E
Net Sales 13,815.9 17,779.7 21,271.8 25,907.7 Net Profit 731.2 893.5 1,295.6 1,638.6
Add: Dep. & Amort. 74.5 85.5 92.9 103.5
Raw materials (9,657.5) (12,517.2) (15,166.6) (18,471.9) Cash profits 805.7 979.0 1,388.5 1,742.2
Employee costs (609.0) (708.5) (1,116.7) (1,340.0)
Other Expenses (2,117.3) (2,756.6) (2,747.7) (3,346.5) (Inc)/Dec in
Cost of sales (12,383.8) (15,982.3) (19,030.9) (23,158.4) -Sundry debtors (674.2) (1,338.1) (1,110.5) (1,389.6)
-Inventories (422.9) (155.2) (437.6) (482.6)
Operating Profit 1,432.1 1,797.4 2,240.9 2,749.3 -Loans/advances (305.2) (240.7) (113.0) (124.3)
Depreciation (74.5) (85.5) (92.9) (103.5) -Sundry creditors 1,458.9 631.9 442.5 552.1
PBIT 1,357.6 1,711.9 2,148.0 2,645.7 -Others (569.1) 1,000.6 541.9 623.2
Other income 94.3 100.9 121.1 167.9 Change in working capital (512.5) (101.5) (676.7) (821.3)
Interest (337.6) (412.6) (340.9) (375.0) CF from Oper. activities 293.2 877.5 711.8 920.9

Profit before tax 1,114.3 1,400.2 1,928.1 2,438.7 CF from Inv. activities (79.7) (229.4) (175.2) (200.0)
Provision for tax (383.1) (506.7) (632.6) (800.0)
Reported PAT 731.2 893.5 1,295.6 1,638.6 CF from Fin. activities (187.2) (429.6) 1,350.3 (262.3)
Extraordinary Items - - - -
Adjusted PAT 731.2 893.5 1,295.6 1,638.6 Cash generated/(utilised) 26.3 218.5 1,887.0 458.6
Cash at start of the year 267.5 293.8 512.3 2,399.3
Cash at end of the year 293.8 512.3 2,399.3 2,857.8

Balance Sheet FY08 FY09 FY10E FY11E Ratios FY08 FY09 FY10E FY11E
Equity capital 172.9 172.9 193.4 193.4 OPM 10.4 10.1 10.5 10.6
Reserves 1,575.0 2,277.2 4,933.2 6,345.1 NPM 5.3 5.0 6.1 6.3
Net worth 1,747.9 2,450.1 5,126.6 6,538.5 Tax rate (34.4) (36.2) (32.8) (32.8)

Def. Tax Liab.+Minority In 41.3 31.5 16.2 - Growth Ratios (%)

Secured loans 1,559.3 1,480.3 1,480.3 1,480.3 Net Sales 27.2 28.7 19.6 21.8
Unsecured loans 807.7 658.2 658.2 658.2 Operating Profit 64.7 25.5 24.7 22.7
Total debt 2,367.0 2,138.5 2,138.5 2,138.5 PAT 86.8 22.2 45.0 26.5
CAPITAL EMPLOYED 4,156.2 4,620.1 7,281.3 8,677.0
Per Share (Rs.)
Gross block 1,440.0 1,544.7 1,744.7 1,944.7 Net Earnings (EPS) 42.3 51.7 67.0 84.7
Accumulated depreciatio (497.9) (572.8) (665.7) (769.2) Cash Earnings (CPS) 46.6 56.6 71.8 90.1
Net block 942.1 971.9 1,079.0 1,175.5 Dividend 8.0 10.0 10.0 10.0
Capital WIP 3.0 24.8 - - Book Value 101.1 141.7 265.1 338.1
Total fixed assets 945.1 996.7 1,079.0 1,175.5 Free Cash Flow 12.3 37.5 27.7 37.3
Goodwill - - - -
Investments 223.3 315.6 315.6 315.6 Valuation Ratios
Inventories 1,621.8 1,777.0 2,214.6 2,697.2 P/E(x) 20.7 17.0 13.1 10.3
Sundry debtors 4,253.5 5,591.6 6,702.1 8,091.7 P/B(x) 8.7 6.2 3.3 2.6
Cash & bank 293.8 512.3 2,399.3 2,857.8 EV/EBIDTA(x) 12.0 9.3 7.5 6.1
Loans & advances 889.7 1,130.4 1,243.4 1,367.8 Div. Yield(%) 0.9 1.1 1.1 1.1
Other current assets - - - - FCF Yield(%) 1.4 4.3 3.2 4.3
Sundry creditors (1,458.9) (2,090.8) (2,533.3) (3,085.4)
Acceptances (2,186.4) (3,100.1) (3,565.1) (4,099.9) Return Ratios (%)
Provisions (425.7) (512.6) (589.5) (677.9) ROAE 50.1 42.6 34.2 28.1
Working capital 2,987.8 3,307.8 5,871.4 7,151.3 ROACE 35.0 39.0 36.1 33.2
Deferred Tax Assets - - 15.3 34.7
Miscellaneous exp. - - - -
CAPITAL DEPLOYED 4,156.2 4,620.1 7,281.3 8,677.0

This document has been prepared and compiled from reliable sources. While utmost care has been taken to ensure that the facts stated are accurate and opinions given are
fair and reasonable, neither the Company nor any of its Directors, Officers or Employees shall in any way be responsible for the contents. The Company, its Directors, Officers
or Employees may have a position or may otherwise be interested in the investment referred in this document. This is not an offer or solicitation to buy, sell or dispose off
any securities mentioned in this document.
For Further details contact : Mr. Milind Karmarkar / Mr. Umesh Gupta / Ms. Hiral Sanghvi / Mr. Kunal Bhatia / Ms. Purvi Shah / Mr. Lalitabh / Mr. Ashutosh
508, Maker Chambers V, 221 Nariman Point, Mumbai 400 021 Tel: 91-22- 2282 2992, Ext.147 Fax: 91-22-2287 0092 E-mail: equity.research@dalal-broacha.com