500031: Profit Margin Pressures Will Likely Weigh On Future Share Performance

Narrative Update on Bajaj Electricals

Analysts have reduced their price target on Bajaj Electricals from ₹507 to ₹432, citing expectations of slightly higher discount rates and pressure on profit margins, which are only partially offset by marginally stronger revenue growth and a higher anticipated future P/E multiple.

What's in the News

• Bajaj Electricals has initiated a strategic review of its loss making Nirlep cookware and pressure cooker business, including potential options such as discontinuation, sale, or hive off, to sharpen focus on core consumer electricals and higher margin categories (company disclosures, industry executives).
• The board has approved restructuring of the Nirlep cookware unit. The business operates through a separate distribution channel and has been weighed down by unprofitable factories and weak brand traction versus national competitors (company annual report).
• The company is exploring category expansion into 8 to 10 new product areas. It aims to reallocate capital from non synergistic cookware operations to faster growing, higher margin lines within its core electronics portfolio (company strategy commentary).
• Bajaj Electricals has received the resignation of its Chief Financial Officer, E C Prasad, effective at the close of business on January 26, 2026. He is leaving to pursue an external professional opportunity, triggering an upcoming finance leadership transition (board meeting disclosure).
• The board has scheduled meetings to consider unaudited Q2 and half year FY2025 26 financial results and to evaluate an INR 146 crore proposal to acquire Morphy Richards brand and related IP rights across key South Asian markets. This reflects active portfolio management and brand consolidation moves (board meeting notices).

Valuation Changes

• The Fair Value Estimate has fallen significantly from ₹507.00 to ₹432.00. This reflects a more conservative outlook on the stock.
• The Discount Rate has risen slightly from 15.87 percent to 16.07 percent, indicating a marginally higher perceived risk or required return.
• The Revenue Growth assumption has risen marginally from 8.92 percent to 8.97 percent, implying a small upgrade to top line expectations.
• The Net Profit Margin forecast has declined meaningfully from 4.45 percent to 3.90 percent, pointing to anticipated pressure on profitability.
• The future P/E multiple has risen notably from 26.6x to 33.0x, suggesting a higher valuation being assigned to Bajaj Electricals relative to its expected earnings.