Bajaj Electricals Limited (BAJAJELEC) Q4 2026 Earnings Call Transcript

Ladies and gentlemen, good day, and welcome to the Bajaj Electricals Limited Q4FI26 Earnings Conference Call hosted by ICICI Securities Limited. As a reminder, all particle lines will remain in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal the operator by pressing star, then zero on your touch-tone telephone. Please note that this conference is being recorded. I will now hand the conference over to Mr. Manan Goyal from ICC Securities Limited for opening remarks. Thank you, and over to you, Manan. Thank you.

On behalf of ICICI Securities, we welcome you all to Q4 and FY26 Result Conference Call of Bajaj Electricals Limited. Today, we have with us Senior Management, represented by Mr. Shekhar Bajaj, Chairman, Mr. Sanjay Kachadeva, MD and CEO, Mr. Vishal Chadha, COO, Consumer Products, Mr. Rajesh Nayar, COO, Lighting Solutions, Ms. Ashwin Amand, CFO, Mr. Sukitu Shah, Finance Controller. Now, I'll hand over the call to the management for their initial comments on the quarterly and annual performance. Then, we will open the floor for Q&A session. Thank you, and over to you, sir.

Thank you. Good evening, ladies and gentlemen. I'm Shekhar Bajaj here. Thank you for attending our Q4 earnings call. We hope you had the opportunity to review our financial results and earnings presentation. In the quarter marked by a milder start to the summer season, due to political uncertainties, supply chain disruptions, and input cost pressures, we have delivered a modest performance. In the last quarter, we highlighted that we have embarked on a journey of cultural and structural change. In the way we engage with the channel and to move to a more balanced approach between demand-led sail-thru and volume-led push, we are progressing well in this journey. While these macroeconomic factors were demand-disruptive, the lighting solutions vertical still delivered a strong performance. EVID increased by 28% on a year-to-year basis. Further, the vertical ended the year with highest ever annual EBIT margin of 8.5%. We are confident of continuing this trajectory going forward. The consumer product vertical bore the brunt due to a weaker start to summer. However, we expect the vertical to bounce back in the next financial year. I would also like to welcome Ashwin Anand, our new CFO in the company. She has over 16 years of diverse experience across finance, strategy, and governance, and has worked with leading global organizations including EY, Deloitte, Mondelez, Colgate-Palmolive, and most recently Tata-Starbucks. We are confident under her leadership, we will be able to build Bajaj Electricals to a more resilient and future-ready organization. Further, in celebration of 100 years of Bajaj Group, the Board of Directors have decided to maintain a dividend rate same as last year and accordingly approve I recommended a final dividend of 3 rupees a share, that's 150% of case value of 2 rupees each on equity shares for the financial year ending 31st March 2026. Before I hand over to Sanjay Sajdeva, our MD and CEO, I would like to highlight that the fundamental strength of our business remains firmly intact. Our brands continue to enjoy strong consumer awareness. Our market shares across key categories have remained stable, and our distribution's reach remains deep. I now hand it over to Sanjay for detailed business and financial highlights. Thank you.

Thank you, Chairman, sir. Good evening, ladies and gentlemen, and thank you for joining our investor call. First of all, sincere apologies to everyone for cancelling the investor call last week. It was because of the circumstances out of the control, more to do with the technical reasons. Before we start, I would like to welcome Ashwin Anand, who is our new CFO into the company. With her rich and diverse experience, I am extremely confident that she will add immense value to our company. I would also like to thank Suketu Shah, who was our acting CFO, for his contribution during this transition phase. As Chairman said, we have delivered modest performance for this quarter. Let me start with Lighting Solutions. Like we mentioned in the past, portfolio expansion remains one of our top priorities. As part of this strategy, we entered WIRE's category in this quarter. The foray into WIRE's portfolio has witnessed a robust market response with some encouraging demand trends across key markets. Backed by strength of Bajaj Electrical's brand, expanding distribution reach and focus exclusion, we are confident This business will grow in the future and will emerge as one of the strong growth drivers for the next few quarters. This vertical has consistently delivered revenue growth and margin in the last financial year. We delivered 60% revenue growth in quarter four and delivered EBIT margin of 8.7. This has been a successful year for Lighting Solutions Vertical. The annual turnover have expanded by 9.5% and annual EBIT margin close to 8.5%. We are confident of carrying this momentum into next year. On consumer products vertical, the last quarter was not as good as we wanted it to be. Part of this was intentional. This is about, we wanted to move the business. To a more balanced one, where we want to balance the demand-led sell-through with a volume-led push. This journey so far is progressing well, and we are confident the coming quarters in the year will be much better.

The performance for the consumer products

vertical was mixed across sub-segments. At one end, while the summer cooling products had an impact of delayed onset of the summer season, coupled with geopolitical uncertainties, supply chain disruptions, and input cost pressures during the last three weeks of the quarter, the other end, the consumer products, the kitchen appliances, did well. Categories like induction cooktops and mixers have delivered double-digit growth. For the quarter, the verticals reported a loss due to operating delivery. We are, however, confident of turning this around as we go forward next quarter. Now, let me touch the financial parameters for the company. We continue to generate positive cash flow from operation and are ending the year with 934 crores of cash. We are operating at negative working capital. This strong liquidity position provides us with adequate financial flexibility to deploy. While maintaining balance, sheet strength, and capital discipline. Lastly, price increases and war-induced demand has been supportive in this quarter, the quarter we are in. However, sentiment concerns arising out of war, continued price hikes, and patchy summer remains key headwinds. Importantly, our P&L position gives us confidence and flexibility to continue investing behind brands. Distribution and innovations, positioning us well to a sustained growth as we move forward. While the near-term outlook appears constructive, the long-term stance remains cautiously optimistic. Overall, we remain confident in delivering steady and profitable growth going forward. With this, I would like to open the call for questions. Thank you.

Thank you. Ladies and gentlemen, we will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use their handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Participants who wish to ask a question, please press star and 1. We take the first question from the line of Shivam Patel from PL Capital. Please go ahead.

Oh, yeah. Thank you so much for the opportunity. Sir, I just wanted to know your capacitance for Apple 2021. That's my first question. And the second question on the revenue growth in plants and appliances in consumer products. Why on lightning side, if you can point out why it's utilized on other products, do you really agree? And how would the wireless suitcase margin have performed in this product? Yeah. So these are the two questions.

The question is clear. Can you repeat the question? Questions are not clear.

Your voice is a bit muffled. That's why we are not able to hear your questions correctly.

Yeah, is it clear now? Yeah, so I just wanted to know your capex plan for FI27 and FI28. So that's my first question. And second question is on the consumer products, how much fans and appliances have performed in this quarter individually, while on the lightning side, why us, switch gears, and other products have performed individually?

So, you mean to say financial year, 26, 27? CapEx on 26, 27, right?

No, CapEx for 27 and 28, your CapEx plan.

Next, okay, next two years.

Yeah, next two years.

Next, CapEx will substantially come down. It will be less than half what we have been doing in the past. So, it will be mainly for replacement of molds, or in some cases, On innovations, we are going to use CapEx wherever it is necessary, but the intensity of the CapEx investments will come down as we move forward to the next two years.

So, as far as the appliances portfolio is concerned, in kitchen appliances, as was mentioned in the opening remarks, we have delivered a very good, almost 30% growth over last year, same quarter. We have had modest growths in water heaters and irons. Coolers, being a seasonal product, and with the onset of, you know, delayed onset of summer, has shown a degrowth, and a similar trend has been observed in fans also.

This is Rajesh Sivam regarding bifurcation between lighting. If I bifurcate that between two verticals, which is professional lighting and consumer lighting, professional lighting has also grown and consumer lighting in trade has grown. Two categories, what we recently launched in that wire was like in February. So recent orders were integrated and as Sanjay mentioned, there is a good traction and response which is coming from the market. There's still next two, three quarters will be important for us to track and ensure that whatever growth targets we have taken here actually.

Okay, sir. That was very helpful. I will call back in the queue.

Thank you.

Thank you. Ladies and gentlemen, a reminder, if you wish to ask a question, please press star and 1. We take the next question from the line of Arun Agarwal from Kotak Securities. Please go ahead.

Yeah, thanks for the opportunity, sir. Sir, one is on the lighting solution business. We clocked good margins this quarter, this year, in fact. You said that this, you know, the momentum would likely continue in the lighting solution business going forward in FY27 as well. So, could you just help us out? Is there a possibility of further margin expansion or, you know, this is the rate that would likely continue over the next one to two years in lighting solution?

Thanks for the question. As we have been talking about, we are driving product mix and premium products into the lighting category, which has helped us to bring this additional margin. The strategy will be there to continue expanding the margins, but we will not be able to tell you the figures where we want to reach from here.

So, just to sort of add to that is, look, the margins are good in lighting, and there are a lot of opportunities in the lighting business. While our gross margin movement will be positive, part of that we are planning to use to accelerate growth in lightning. So, at the EBIT level, it may be close to where we are, but whatever, you know, advantage we get in terms of margins or the momentum, we'll spend that behind to build momentum further.

All right. Coming on to the consumer product business, this business has seen significant pressure in decent quarters now. Now, how do you see, because every quarter what we are seeing, one or the other segment, you know, sometimes, you know, one category performs, and, you know, the other category is going to sort of decline more. So, where do you see, you know, maybe, you know, how many quarters would it take for us, you know, that we really do see, you know, momentum returning back into the consumer product business?

So, consumer products business, we had some long-term issues and we tried to solve most of them or some of them in the last 12 months, including we had to flush out excessive stock in the trade, partly driven by sales in the previous few quarters and also because of the season which didn't go as well as we wanted it to.

Thank you.

We are waiting for a good summer because the part of the excess sale is also the summer products, you know, fans and coolers. Now, most of that is out, you know, most of that is out. The stock levels are now reasonable. Therefore, we will be selling as per what the tertiaries are now because there will not be any level of correction, you know, apart from that. Now, when we see tertiaries, we are in good position in most of the categories, except for fans, where we need to do more work when it comes to fans. So, we are clear, you know, where we are, what is going well, what will continue to do well, what will turn around, and where we need to do more work. So, except for fans, we are in good place. The fans is something we need to work, which we are going to, you know, which the teams are working in the next 12 months should be much better.

So, from a margin perspective, just directionally, I understand you won't give us any guidance there, but from a direction purpose, is it fair to assume that the EBIT margins and consumer business, what we have done, initially used to be about 6-7% earlier, which has come down to around 3-3.5% in, you know, 24-25, and lastly, I think it was negative. So, is it fair to assume that we would at least reach closer towards the FY24-25 margin distance, or are there two things, you know, difficult?

Difficult to say exact margin, and I'll tell you why, because there is another factor which is affecting the cost of our products is the war-related inflation. Not everything will be able to pass on because, you know, we have to see, we are trying all the possibilities of, you know, leveraging a supply chain network or stepping up savings. But we are using all the levers to see that, you know, we deliver a good margin. However, we do believe we have to also see we stay competitive in the market. And in that context, maybe whatever is left, not everything, we will be able to pass on to consumers. This is our current hypothesis, but we will see as the, you know, here it goes. In that case, we will not be able to deliver. It's difficult at this stage to say whether we'll be able to deliver a 24-25 margin. We are also very clear that we want to do that level of margin which is sustainable, which means we are very, very clear that we want to spend money behind innovations and behind brands. So you will see a step up in that in the next 12 months, our investment behind brands and investment behind innovations.

Okay. So, it's correct to assume you, I think, said that the inventory levels are completely normalized across all the product categories at this point in time, right?

It's much lower. There are some, you know, coolers and mainly coolers. There is still correction required, but it will not be material for us to say that it's going to impact, you know, majorly to full year performance. Some quarters here and there it can do, but not a full year performance.

Okay. And so lastly, on your, you know, for the past couple of quarters, now we are seeing some, you know, exceptional items coming in. So is these kind of exceptional items through, or we could expect some more, you know, exceptional items or write-offs or provisions going forward?

Hi, it's okay to decide. I think so far all that we could trace and whatever, we could find certain issues. I think we have taken care of that. And we hope that we have a good year on next year.

Okay, thank you. Thank you so much.

Thank you. We take the next question from the line of Akash Fadya from Yes Securities. Please go ahead.

Yeah, thank you very much, sir. So, what is the quantum of price increase we have taken in Q4, and any follow-up price increase we have taken in Q1, F527?

We have, in consumer products, our price increases have ranged from anywhere from 3 to 10 percent in quarter 4, and we have already taken a price increase in the same range in April. So, and in May also, we have announced price increases where we are seeing further pressures because of war and commodity inflation.

But despite the, say, three price increases, we have not yet covered the commodity inflation completely. Is that correct? And further price increases will be required.

See, we have covered the commodity inflation to the extent possible, but as Sanjay mentioned that going forward, we need to be more calibrated because there is demand uncertainty which might rise. We have to look at it in the overall context, but so far we have covered up to the extent possible the commodity inflation.

Thanks a lot.

Thank you. Participants, if you wish to ask a question, please press star and one. We take the next question from the line of Manan Goyal from ICC Securities Limited. Please go ahead.

Thank you for the opportunity. So, sir, my first question is regarding how are we doing in terms of channel inventory? Like, is it largely normalized or is it at the elevated level? Second is, how are we seeing the demand in terms of the summer season going ahead? Because we have seen, like, IMD rating has already been mentioned that there has been a good summer season going ahead. So, how are we seeing the traction in terms of primary channels as well as secondary channels? Yeah, these are my two questions.

So on consumer products, we have corrected the channel inventory to a large extent, but there are still some categories like summer products, coolers specifically, where they are still at a slightly elevated level. We are watching the season progress. Quarter 4 was a delayed summer. In this quarter so far, there has been a mixed bag of summers as well as unseasonal rains. In some parts of the country, we are seeing good demand coming in because the summer is good there, but in some parts of the country, it is not as good. So it's a mixed bag. In the early part, north did not see summer, but now we are seeing a very good summer coming into north. South was pretty hot, and we saw good traction coming over there. So, it's not a consistent weather pattern across the country. It's a mixed bag, and we are being agile enough to fulfill the demand wherever we see an opportunity.

Understood. Thank you so much, sir.

Ladies and gentlemen, if you wish to ask a question, please press the star and one. We take the next question from the line of Manoj Ghori from Equius Capital. Please go ahead.

Yeah, thanks for the opportunity. Sir, in the opening remarks, somewhere in the comments we highlighted that we'll continue to enhance innovation and other brand building exercises. Can you throw some light up? Because just the backdrop is, if you look at probably from last... Two to three years, when Mr. Anuj was also taking care of the business, there were significant investments made behind the product development and other initiatives. And we probably going by the financials, we were not able to see any positive benefits going in. So, going forward, what are these investments for, and how should it translate into growth numbers and margin trajectory, probably keeping aside FI27, but somewhere around FI28 to FI29 levels? That's the only question, sir.

Thank you. So, thank you for raising this. So, there is a lot of learning we have in the last, what has happened in the last few years. And we are going to incorporate that as we are building our innovations for the next two to three years. Which means we are bringing innovations which we at the right price point with the right margins. And we are also making sure not only that the right price point with the right price point with the right margin, but also we are bringing innovations we have adequate margin which we which which is necessary to support those innovations in the market. So in the end, the idea is that with these innovations, we don't want to face that it dilutes our own P&L. But at the same time, we're making sure these innovations are the one which consumer needs at the price, at the right price, and which is different from what is already existing in the market. So, their approach is changing now, and that should reflect As we move forward with innovations.

Can it be quantified in some form, at least in numbers, if you can give some highlights, because that will even give us some confidence for modeling purpose as well.

So, tell us more about what numbers you are talking, for example.

Sir, for example, like how should we look at the growth, how much acceleration we can expect during FY28 and FY29, and probably how the margin trajectory should also shape up based on these initiatives.

So, our intent going forward is to grow ahead of the market. That is number one. Now, we believe market will grow close to mid-single digit. So, therefore, our growth rate should be more than that. Our intent is to make industry average, that is industry average profit, and industry average is between 6 to 8, 9. And that is where it should be. So, as I told you, this is our intent and that's what we are working on. And that's where the entire, you know, teams are looking at all the opportunities where we can build this momentum to this level and build it profitably to the level which industry allows. Does that help you? Yes, yes.

Thanks a lot, sir, and wish you all the best.

Thank you. We take the next question from the line of Natasha Jain from Philip Capital.

Thank you for the opportunity, sir. Two questions. First, if you could throw some light in terms of your market share and fans, how it has moved, say, in the last two to three quarters. And the second question is, reason for a very sharp jump in your OCS. Thank you.

So, on the FAN's market share, we have lost a bit of market share, and primarily the reason behind that is that we are still not as good on the BLDC performance as we would like it to be. The industry's contribution is higher versus ours, so we are working hard towards making sure that that part of the FAN's portfolio. Gets better.

Hi, I think second question was on the operating cash flow, super to this side. So we have generated around 400 crores of operating cash flow for the quarter and that's primarily driven because of the working capital improvements. Half of it coming from inventories and half of it coming from the trade receivers.

And a follow-up on the earlier answer, so the follow-up is that in terms of DLDC, can you tell us how is the scale-up happening at Bajaj, and what is the plan in terms of, I believe they've launched the next product, so how is the feedback, and what is the strategy they are going forward? Are we planning to roll out full-scale?

Hello, Sanjay. So, let me put it like this. We know we are not competitive in FAIR. We recognize that. And we are working on various, from various angles to improve the situation. So we have traditional induction funds. We are very good in that, in terms of, especially the economy and sub-economy. Both in terms of our offerings, both in terms of our price points. And we make reasonable margins of that. Now the other one, which is, but unfortunately that segment is not growing. The segment which is growing is BLDC, and this is where we have gaps. In the next 12 months, our plan is to bridge this gap, and this is where we believe the acceleration of growth will happen.

Thank you so much, Saran. All the best.

Ladies and gentlemen, if you wish to ask a question, please press star and 1. Participants who wish to ask a question, please press star and 1. We take the next question from the line of Shivam Patea from PL Capital. Please go ahead.

Yeah, sir, I just wanted to know on working capital side, will it be maintained at what FI26 levels or can you see an improvement? Thanks.

Hi, Suketu here again. So, we have been operating at negative working capital for the past two years, and the expectation is to continue on those same lines for the next year as well. And we endeavor to achieve that decision.

Okay, sir. Thank you. Thank you very much.

Thank you. Ladies and Chairman, if you wish to ask a question, please press star and 1. Participants who wish to ask a question, please press star and 1. Participants who wish to ask a question, please press star and 1. As there are no further questions from the participants, I now hand the conference over to the management for their closing comments.

Thank you very much, all the participants, for participating in this investor's call, and sorry once again that we could not complete it in the earlier period. I am really, all of us are working very hard. Last year was a very bad year for us for various reasons which has been explained. Currently, we are hoping it will be a much better year. You will be all much happier compared to what has happened last year. So, with all that, wish you all the best, and thank you.

Thank you. On behalf of ICICI Security is Limited, that concludes this conference call. Thank you for joining us, and you may now disconnect your line.