Bajaj Electricals Ltd

Due to year end closing and audit, i am unable to post regularly. However few days back i have entered in Bajaj Electricals at 220/-. In my earlier post, i have preferred surya roshni over it due to loss incurred by Bajaj. But after delving dipper, it has emerged that for first nine months of this year, its consumer product division has posted a profit of around 117 cr, while its engineering contract business has posted a loss of 110 cr. Engineering division is showing losses due to aggressive bidding in the past. Now management has decided to bidding for profitable projects only. Order backlog for loss making projects is reducing.

So bajaj is going to show huge profits in future years. Its consumer divison is having a ROE of around 70-80% (need to recheck, but it is near this) which can envoy even greatest of FMCG giants like Nestle. It has also come into my knowledge that company has gone for outsourced business model for consumer products mainly because of Govt. regulations which has stipulated this segment for small scale units only. It also needs to be confirmed.

But I have replaced my entire holding of Surya Roshni with BEL due to its superior business model and brand recall. Surya has blocked a lot of capital in low margin Steel business.

I will post a complete study on Bajaj electrical whenever I’ll have time.

CMP is 222/-

(Views are personal and should not be taken as a recommendation for buying or selling a stock. Stock markets are inherently risky so kindly do your Due Diligence before investing)