Bajaj Electricals hits over 2-year low, down 12% in two days on weak Q2 nos

Shares of Bajaj Electricals hit an over two-year low of Rs 338, down 4 per cent on the BSE on Thursday, after the company reported weak set of numbers for the quarter ended September 2019 (Q2FY20). The stock of house appliances company has slipped 12 per cent in the past two trading sessions, and was trading at its lowest level since August 30, 2017.

In the recently concluded quarter, Bajaj Electricals reported a net loss of Rs 32.55 crore against a net profit of Rs 29.83 crore logged in the year ago quarter. Operational revenue, too, decreased 31.5 per cent YoY to Rs 1,096 crore, due to poor performance by EPC segment. The company had reported revenue of Rs 1,600 crore in the corresponding quarter of the previous fiscal. As on October 1, 2019, the company's order book stood at Rs 1,799 crore.

The management said consumer products segment registered a moderate growth of 9 per cent YoY in the top line on account of an overall slowdown in the economy, while the EPC segment registered a planned de-growth due to reduction in fresh bidding.

"In the near future, this will continue to impact the company’s profitability, but the company is confident about a healthy bounce back as its strategic shift plays out," the management said in a statement.

“The company plans to focus on reducing debt and improving cash flows focusing more on the consumer business while remaining selective on the EPC side particularly power distribution business. This would mean near term pressure on profit and loss (statement) as even the cash rich consumer business is seeing some cooling off in growth,” analysts at Antique Stock Broking said in a result review.

Given the significant downward pressure, with the EPC business posting losses and the expectation of losses sustaining for next 3-4 quarters, the brokerage firm trimmed Bajaj Electricals' FY21 earnings estimates by 39 per cent and downgraded the stock to 'HOLD' with a revised target price of Rs 305 based on 20x its FY21 earnings.

At 11:05 am, the stock was down 4 per cent at Rs 339, as against a 0.19 per cent rise in the S&P BSE Sensex. The trading volumes on the counter more than doubled with a combined 194,634 shares changing hands on the NSE and BSE so far.