Bajaj Electrical share jumps 8% in two days; analyst sees more upside

Shares of Bajaj Electrical rallied nearly 7% in early trade on Thursday, in an otherwise weak broader market, driven by a strong volume. The share price of the consumer electrical equipment manufacturing company has been gaining for the last two sessions and has risen 6.7% during this period, while it gained nearly 8% in the past one month. In comparision, the BSE benchmark Sensex was trading 94 points lower at 60,165 levels, following weak cues from global equities.

Bajaj Electrical shares opened marginally higher at ₹1,158.45, against the previous closing price of ₹1,156.40 on the BSE. During the first two hours of trade so far, the largcap stock surged as much as 6.6% to hit a high of ₹1,233, with 0.33 lakh shares changing hands over the counter as compared to the two-week average volume of 0.12 lakh stocks. The market capitalisation climbed to ₹14,063 crore.

The consumer durable stock currently trades 22% lower than its 52-week high of ₹1,588.55 touched on September 17, 2021, and 43% higher than its 52-week low of ₹857.55 on June 17, 2022. The stock has delivered 17.5% return in the last one year, while it has fallen over 5% in the calendar year 2022.

Domestic brokerage ICICI Direct recently revised its rating on Bajaj Electrical shares to “Buy” from “Hold”, with a target price of ₹1,340, a potential upside of around 10% from the current market price.

Earlier this week, Bajaj Electricals announced change in its management and separated the post of chairman and managing director. The ongoing transformation journey is being seen as part of company's long-term strategy to strengthen its leadership, streamline its corporate structure, boost performance and balance sheet and the planned demerger of the engineering, procurement, and construction (EPC) business.

The consumer durable products maker promoted its Executive Director Anuj Poddar to Managing Director and Chief Executive Officer (CEO) for a period of five years, commencing from August 12, 2022. The company also re‐designated Shekhar Bajaj by appointing him as “Chairman”, in the category of a whole‐time director, for a period of five years. The company said that the separation of the chairman and managing director positions was in continuation of the professionalisation of the management of the company and marks the company's commitment to strong corporate governance standards.

For the April-June quarter of 2022, Bajaj Electricals reported a consolidated net profit of ₹41.19 crore for the first quarter ended June 30, 2022, against a net loss of ₹24.97 crore in the same period last year. Its net sales rose 42.25% to ₹1,202.10 crore during the quarter under review against ₹845.04 crore in the corresponding period of the preceding fiscal.

Segment-wise, revenue from 'Consumer Products' grew 57.62% YoY to ₹972.93 crore, while EPC business’ revenue rose 6.9% to ₹256.07 crore. As of July 1, 2022, the company’s order book stood at ₹913 crore, comprising ₹714 crore for transmission line towers, ₹11 crore for power distribution and ₹188 crore for illumination projects.