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Equity Bottom-Up

<ul><li>We initiate coverage on Bajaj Electricals (BJE) with a BUY rating and target price of INR 1,200</li><li>We believe BJE is a play on the growth opportunity in FMEG and anticipated rural recovery, given (1) its diverse product offerings along with a leadership position within key categories in home and kitchen appliances, (2) its well-entrenched distribution network, and (3) its higher rural saliency vs peers (c.2x of peers)</li><li>After turning net cash (after four decades) and simplifying its corporate structure under Phase 1 of its transformation journey, in its next phase, BJE is focused on industry-leading growth and aims to achieve it through (1) refreshing the product portfolio, (2) offering products across the consumer value chain via a multi-brand strategy, and (3) stepping up investments in branding and innovation.</li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

We initiate coverage on Bajaj Electricals (BJE) with a BUY rating and target price of INR 1,200We believe BJE is a play on the growth opportunity in FMEG and anticipated rural recovery, given (1) its diverse product offerings along with a leadership position within key categories in home and kitchen appliances, (2) its well-entrenched distribution network, and (3) its higher rural saliency vs peers (c.2x of peers)After turning net cash (after four decades) and simplifying its corporate structure under Phase 1 of its transformation journey, in its next phase, BJE is focused on industry-leading growth and aims to achieve it through (1) refreshing the product portfolio, (2) offering products across the consumer value chain via a multi-brand strategy, and (3) stepping up investments in branding and innovation.Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Bajaj Electricals (Initiating Coverage): Making Strides in Its Transformation Journey. BUY

Thematic (Sector/Industry)

<ul><li>With Q2 being seasonally the weakest quarter, the demand environment remained impeded by weak consumer sentiment due to inflationary pressures</li><li>As channel inventory ran dry post a sizzling summer season, primary sales of cooling products (more so RAC and air coolers) are likely to support overall industry growth</li><li>While Onam demand (start of the festive season) was below expectation, early trends from Navratri/Dusshera have been encouraging</li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

With Q2 being seasonally the weakest quarter, the demand environment remained impeded by weak consumer sentiment due to inflationary pressuresAs channel inventory ran dry post a sizzling summer season, primary sales of cooling products (more so RAC and air coolers) are likely to support overall industry growthWhile Onam demand (start of the festive season) was below expectation, early trends from Navratri/Dusshera have been encouragingContent is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Consumer Durables & EMS (Q2FY25 Results Preview): Soft Quarter, Festive Season a Key Monitorable

<ul><li>In Q1FY25, the consumer durables aggregate revenue grew by 21% YoY (+16% 2-yr CAGR)</li><li>The growth was driven by the summer portfolio (room AC, air coolers, fans) which benefited from a harsh summer season</li><li>White goods/ ECD segments’ revenues grew by 41%/17% YoY (+19%/+12% 2-yr CAGR)</li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

In Q1FY25, the consumer durables aggregate revenue grew by 21% YoY (+16% 2-yr CAGR)The growth was driven by the summer portfolio (room AC, air coolers, fans) which benefited from a harsh summer seasonWhite goods/ ECD segments’ revenues grew by 41%/17% YoY (+19%/+12% 2-yr CAGR)Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Consumer Durables & EMS: Decoding Q1FY25 Trends

<ul><li>ONGC: We maintain our REDUCE rating on ONGC, with a target price of INR 286, given: (1) limited upside potential for ONGC’s crude price realisation in the current environment with a levy of windfall tax, (2) gas price realisation too unlikely to change significantly, as APM gas price is frozen until March 2025 and 95% of ONGC’s gas sales fall under APM and (3) slower ramp-up in oil &amp; gas production</li><li>In Q1FY25, reported EBITDA stood at INR 186bn (-4% YoY, +7% QoQ), coming in above our estimate owing to lower-than-expected statutory levies</li><li>PAT at INR 89bn (-11% YoY, -9% QoQ) was below our estimate, mainly driven by higher-than-expected depreciation and depletion costs</li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

ONGC: We maintain our REDUCE rating on ONGC, with a target price of INR 286, given: (1) limited upside potential for ONGC’s crude price realisation in the current environment with a levy of windfall tax, (2) gas price realisation too unlikely to change significantly, as APM gas price is frozen until March 2025 and 95% of ONGC’s gas sales fall under APM and (3) slower ramp-up in oil &amp; gas productionIn Q1FY25, reported EBITDA stood at INR 186bn (-4% YoY, +7% QoQ), coming in above our estimate owing to lower-than-expected statutory leviesPAT at INR 89bn (-11% YoY, -9% QoQ) was below our estimate, mainly driven by higher-than-expected depreciation and depletion costsContent is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

HSIE Results Daily: ONGC, TVS Motor, NCC, Bajaj Electricals, Symphony

<ul><li>With the country witnessing an intense heatwave, demand for consumer durables in 1Q was largely led by cooling products which witnessed inventory stock-outs as demand outstripped supply</li><li>Ex of the cooling portfolio, there was the sustenance of only a gradual improvement in consumer sentiment</li><li>Rising RM prices, high A&amp;P spending and EPR costs are likely to keep margins under check</li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

With the country witnessing an intense heatwave, demand for consumer durables in 1Q was largely led by cooling products which witnessed inventory stock-outs as demand outstripped supplyEx of the cooling portfolio, there was the sustenance of only a gradual improvement in consumer sentimentRising RM prices, high A&amp;P spending and EPR costs are likely to keep margins under checkContent is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Consumer Durables & EMS: Summer Season Drives Demand Uptick

India

Bajaj Electricals Limited manufactures electric fans and general lighting items, such as lamps, special lamps, fluorescent tubes, and lighting fixtures.  The Company also manufactures consumer durables like small electrical appliances.

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Bajaj Electricals (BJE IN)

Bajaj Electricals (Initiating Coverage): Making Strides in Its Transformation Journey. BUY

We believe BJE is a play on the growth opportunity in FMEG and anticipated rural recovery, given (1) its diverse product offerings along with a...

HDFC Securities

Consumer Durables & EMS (Q2FY25 Results Preview): Soft Quarter, Festive Season a Key Monitorable

With Q2 being seasonally the weakest quarter, the demand environment remained impeded by weak consumer sentiment due to inflationary pressures

HDFC Securities

Consumer Durables & EMS: Decoding Q1FY25 Trends

In Q1FY25, the consumer durables aggregate revenue grew by 21% YoY (+16% 2-yr CAGR). The growth was driven by the summer portfolio (room AC, air...

HDFC Securities

HSIE Results Daily: ONGC, TVS Motor, NCC, Bajaj Electricals, Symphony

We maintain our REDUCE rating on ONGC, with a target price of INR 286, given: (1) limited upside potential for ONGC’s crude price realisation in...

HDFC Securities

Consumer Durables & EMS: Summer Season Drives Demand Uptick

With the country witnessing an intense heatwave, demand for consumer durables in 1Q was largely led by cooling products which witnessed inventory...

HDFC Securities

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