Bajaj Electricals (BJE) is in a transformation phase over the last two years with the company taking multiple steps to improve the overall quality of earnings and get itself prepared for the next phase of growth for the company.

The recent Corporate restructuring review step will help the company
a) Enhance focus and positioning of both its business
b) Help in better capital allocation and
c) Ring-fencing the cash flow deployment from its cash-generating consumer products business to its weak cash-guzzling EPC business.

A leading brokerage remain optimistic about the future prospects of BJE and maintain our Buy rating on the stock given
a) Consumer franchise has witnessed improved business momentum with market share gain and improved profitability
b) Receding EPC business losses
c) Better cash flow generation
d) Improved balance sheet quality with net debt on the books at INR2.4b and target to become net cash by year-end.

The Brokerage expects BJE to deliver 15% revenue CAGR and 33% earnings CAGR over FY21-24E and thus maintain a Buy rating with a SOTP target price of INR1,370 (27x EV/EBIDTA for consumer products business and 5x EV/EBIDTA for EPC business on an FY24E basis).