ICRA upgrades rating on NCDs of Bajaj Electricals

15 Mar 2022 , 03:24 PM

ICRA said that the upgrade in the long-term rating of Bajaj Electricals Limited (BEL/the company) factors in the sharp reduction in the companys debt level over the past few quarters, which has enabled a considerable reduction in the interest cost in FY2021 and 9M FY2022, thereby supporting the debt coverage indicators.

The positive cash flows from the consumer products division and a notable recovery of receivables in 9M FY2022 from the engineering-procurement-construction (EPC) segment allowed the company to reduce its debt dependence.

The ratings continue to favourably factor in BELs diversified business portfolio as it is present across multiple product categories in the consumer products (CP) business, and its leadership position in the CP business, driven by a strong brand image, product-development capabilities and a wide distribution network.

The ratings are, however, constrained by the EPC segments weak profitability metrics and sizeable pending receivables, despite notable recovery in the current fiscal. The rating also considers the exposure of BELs profitability to the volatility in the raw material prices evident from the moderation in profit margins in the CP segment in the current fiscal, due to elevated commodity prices, and the competitive pressures in both the business segments.

The stable outlook reflects ICRAs expectation that the companys performance would be supported by stable revenues and profitability from its CP segment and realisation of past dues from the EPC segment.

Bajaj Electricals, a part of Bajaj Group, makes consumer products (appliances, fans, lighting) and executes EPC contracts (illumination, transmission line towers and power distribution).

The company reported 50.9% fall in consolidated net profit to Rs 48 crore on a 12% fall in net sales to Rs 1,320 crore in Q3 FY22 over Q3 FY21.

The scrip shed 0.62% to currently trade at Rs 996.25 on the BSE.

Powered by Capital Market – Live News