Bajaj Electricals (500031) Q2 24/25 earnings summary

Executive summary

• Revenue from operations for Q2 FY2025 was INR 1,118 crores, nearly flat compared to INR 1,113 crores in Q2 FY2024, reflecting 0.05% year-over-year growth.

• Profit before tax and profit after tax were INR 15 crores and INR 13 crores, respectively, down from INR 45 crores and INR 32 crores in the prior year, impacted by the absence of a one-time warranty provision reversal.

• Management highlighted ongoing transformation efforts, including premiumization, new product development, and operational efficiency initiatives.

• Early signs of festive demand and rural consumption uptick are expected to drive improved performance in Q3.

• Unaudited standalone and consolidated financial results for Q2 and H1 FY25 were approved on November 7, 2024.

Financial highlights

• Operating cash flow remained positive at INR 22 crores for the quarter, with surplus funds at quarter-end over INR 378 crores.

• Consumer Products EBIT margin dropped to 1% from 4.8% last year, or 2.4% excluding the prior year’s one-time benefit; Lighting Solutions EBIT margin improved to 6% from 5.6% year-over-year.

• Gross margin improved to 30.4% from 29.7% YoY.

• Standalone net profit for Q2 FY25: Rs. 1,290 lakhs, compared to Rs. 3,168 lakhs in Q2 FY24 (restated).

• Actuarial valuation impacted the quarter by INR 4 crores.

Outlook and guidance

• Management expects Q3 to benefit from strong festive demand and ongoing strategic initiatives.

• Margin pressure is likely to persist for the next two to three quarters due to heavy investments in brand, NPD, and cost reduction programs, with benefits expected after three to four quarters.

• Long-term goal remains to achieve double-digit margins, leveraging operating scale and efficiency improvements.

• VRS at Nashik facility aimed at enhancing operational performance.