Bajaj Electricals –Neutral- Angel Securities
Bajaj Electricals has bagged three orders worth Rs408 crore in the engineering and procurement (E&P) division. The largest order is worth Rs324 crore for its transmission line towers (TLT) business, which is to be executed over the next two years.
The second order is worth Rs61.5 crore for rural electrification in Chhindwara, Madhya Pradesh, which is to be executed over 18–24 months. The third order, worth Rs22.5 crore, is for the company’s high mast and street lighting business, which will be executed over the next 2–3 months.
We view the receipt of these orders positively, as they strongly improve the company’s revenue visibility. Currently, the company’s order book stands at Rs1,150cr, which is about 1.5x FY2010 sales of the E&P division, giving decent revenue visibility to the company.
Top-line growth is expected to be supported by the company’s other divisions as well. However, the company’s margins are expected to remain under pressure. Currently, the stock is trading at 13.5x its FY2012E EPS, factoring in most of the growth. We maintain a NEUTRAL rating on Bajaj Electricals.
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