Bajaj Electricals Ltd (BAJAJELEC) Q2FY27 Concall Transcript - Sep-2026 Qtr
Moderator (ICICI Securities Limited): Ladies and gentlemen, good day, and welcome to Bajaj Electricals Limited Q2 FY '27 earnings conference call, hosted by ICICI Securities Limited. As a reminder, all participant lines will be 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 an operator by pressing star then zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Manan Goyal from ICICI Securities Limited. Please go ahead, sir.
Manan Goyal (ICICI Securities Limited): Thank you. On behalf of ICICI Securities, we welcome you all to Q2 FY '27 result conference call of Bajaj Electricals Limited. Today, we have with us senior management represented by Mr. Shekhar Bajaj, Chairman; Mr. Sanjay Sachdeva, Managing Director and CEO; Miss Ashwini Anand, CFO; Mr. Vishal Chadha,
Manan Goyal (ICICI Securities Limited): Consumer Products and Mr. Rajesh Naik, CRO, Lighting Solutions. Now, I hand over the call to the management for their initial comments on the quarterly performance. Then, we will open the floor for Q&A session. Thank you and over to you Shekhar Sir.
Shekhar Bajaj (Bajaj Electricals Ltd): Thank you very much Manan. Thank you. Good evening ladies and gentlemen. I'm Shekhar Bajaj. It's a pleasure to welcome you to our Q2 FY27 earnings call. We hope you've had a opportunity to review our financial results and earnings presentation, both of which are now available on the Stock Exchanges. Before discussing the quarter, I would like to share a personal note. After several decades of having had the privilege of leading and serving Bajaj Electricals, I will be stepping down from my executive responsibility at the end of this calendar year as part of a planned leadership succession. Subject to the requisite approvals, I will continue to remain associated with the company as a Non-Executive Director and Chairman Emeritus. As part of this transition, Sudarshan Sampathkumar, who currently serves as an Independent Director on our board, will assume the role of Non-Executive Independent Chairman from 1st January 2027. I have full confidence in Sudarshan, Sanjay Sachdev, and the management team as they take the company forward. I remain deeply committed to Bajaj Electricals, its people, and its long-term success, and believe this is a right time to evolve our governance model and enable the board to play an even stronger, collective role. I see this as a natural evolution of my role, ensuring continuity in our values and purpose, while further strengthening the governance and leadership framework for the future. As a shareholder and board member, I look forward to continuing to support the company and its management as they take Bajaj Electricals forward on its next phase of growth. Lastly, the Bajaj family is not stepping away. The family remains the promoter and majority shareholder. I will remain on the board, and also Pooja Bajaj and Neerav Bajaj will continue in their present board roles. Now, let me start with a brief overview of the broader operating environment before taking you through our performance for the quarter and the key development across our businesses. During the quarter, commodity costs remained elevated. The broader geopolitical environment also remained uncertain. Against this environment, our team stayed laser-focused on execution, consolidating the channel, driving cost efficiency, and strengthening the foundation we built through financial year '26. We delivered modest revenue growth of hardly 1.5%. While our revenue growth was modest, we were able to maintain our gross margin of 31.9%. We have also improved our EBIT margin by 140 basic points from 3% to 4.4%. The profit before tax has more than doubled from 15 crores to 35 crores on a year-to-year basis. I would say this is a positive step towards implementing our learnings through last year's actions. The board and I remain confident in the direction we have set and the excited about the momentum we are building. With that, let me hand over to Sanjay Sachdev, our MD, to take you through the operational and financial performance in detail. Thank you.
Sanjay Sachdeva (Bajaj Electricals Ltd): Thank you, Chairman Sir, and good evening, everybody. Thank you for joining the call. I'm pleased to walk you through our results in quarter 2, which like Chairman said were modest on top line, but had significant improvement on the quality of gross margins, EBIT, and PBT. But before I start that, I I I would like to take a moment to express my deep gratitude to our Chairman Sir, Mr. Shekhar Bajaj. His leadership, vision, and unwavering commitment have shaped Bajaj Electricals into an institution of today. Under his stewardship, the company has grown more than 200 times.
Sanjay Sachdeva (Bajaj Electricals Ltd): but his contribution goes well beyond that scale. He has laid the foundation, values, and strategic direction that continue to guide us. The new structure provides greater clarity of roles, while preserving continuity and long-term stewardship. The management team remains fully accountable for developing and executing the company's strategy and delivering sustainable performance, supported by the collective guidance and oversight of the board. We remain deeply inspired by Chairman's leadership and vision he has laid out, and are privileged to continue benefiting from his guidance. As as management team, we carry the responsibility of building on the strong foundation and taking Bajaj Electricals forward with the same values, ambition, and commitment to long-term value creation. Now, with that, let me begin with a few high- highlights and provide greater context to the performance this quarter. This quarter, revenue growth was led by growth in consumer products. Our gross margin for quarter two improved by 10 bps. This is incredible given the inflation headwinds that we had been facing. On a year-to-date basis, our gross margin have improved to 32.1% versus 31.4%, which is about 70 bps more than last year. This clearly shows that our cost efficiencies program is yielding results, and that we have been able to manage the input commodity inflation pretty well. Our brand investments for the quarter stood at 3.8% of the revenues, up 150 bps year-on-year. This is reflecting in our con- continued commitment to strengthening the b- Bajaj brand. As communicated earlier, we see brand building as a strategic investment for the future. Our asso- association with programs like Bigg Boss is another step in the journey, enabling us to deepen consumer engagement and enhance visibility across the touch points. Our cost control initiatives all across all lines are yielding results. Our EBIT margins improved by 140 bps from 3% to 4.4%. Adjusted for in- incremental brand investments that we had done, our margins on a like-to-like basis was 5.9% versus 3%, which is quite encouraging. Lastly, the profit before tax has more than doubled to f- from 15 crores to 35 crores on a Y-to-Y basis. Again, adjusted for incremental investment behind the brands, the PBT margin would have been 4.5%. Now, let me deep d- dive deeper into Consumer Products. This vertical has grown by 2.4%, supported by growth mainly in kitchen and domestic appliances, due to categories like induction, cookers, water heaters, steam irons, which all have grown in high double digits. While fans have degrown in this quarter, the premium BLDC growth have been phenomenal. In fact, BLDC fans for us have grown more than 56%, and is now close to 17% of our portfolio. This is not enough, we know that, and we have plans to take it further. This vertical has delivered a consis- consistent EBIT margin of 4% again in this quarter, which while still lower, is encouraging. Adjusted for incremental brand investments, we have delivered and on a like-to-like basis, we have delivered 5.6% EBIT versus 2.8% last year. We endeavor to continue this momentum, while also keep investing behind the brands. Now, coming to the Lighting Solutions ver- vertical. The vertical has grow- degrown by 1.3%, mainly due to revenue contraction in professional lighting. The Consumer Lighting business has done well with a double digit growth, mainly fueled by wires and switchgears. Switchgears has grown by 28%, although on a smaller, you know, on a on a small base. And we are seeing good traction on wires. Vertical has delivered a EBIT of 3.1%. From a channel perspective, our e- e-commerce has grown in double digits this quarter, and focus on exports are also yielding results with growth with very strong growth. Looking ahead, our priorities remain clear: driving premiumization and innovations, optimizing the distribution, strengthening consumer engagement, and continue to invest in our business with discipline. As we move through the festive season
Sanjay Sachdeva (Bajaj Electricals Ltd): supported by strengthening brand preference and focus on consumer-centric portfolio across key categories. With that, I would like to wish all of you and your family a very happy Diwali and joyous festive season ahead. Thank you for continued interest and support in Bajaj Electricals. And we will now open the floor for questions. Thank you.
Moderator (ICICI Securities Limited): Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the touch tone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Sameer Gupta from IIFL Capital. Please go ahead.
Sameer Gupta (IIFL Capital): Hi, everyone. Thanks for taking my question. Sir, just wanted to understand, when I compare the growth performance of the consumer product business versus, let's say, peers like Havells and Crompton to the respective relevant categories, almost all have recorded a double-digit growth and they've also called out pricing tailwinds. Even in appliances, peer like TTK has recorded 30% plus in the previous quarter. They are yet to report for this quarter. So, why is Bajaj an outlier here, at least at a net sales growth perspective? And, I believe you have we have been doing some channel consolidation exercise. How do you evaluate, the success of that? Any numbers or qualitative commentary that you can share, which can give us confidence that we are in that right direction, will be helpful. And if any data you can share on the secondary, revenues, that would also be helpful. That would be my first question, sir.
Sanjay Sachdeva (Bajaj Electricals Ltd): Will you take customer product? Will you take? Yeah, go ahead. Consumer product. So, on consumer products, which is your question, we don't really share, you know, cat product category-wise, but I can say fans have declined more than double digit for us, you know, and, and, you know, while BLDC has grown on a smaller base very well, and the premium fans have also done well. So, it's the fan which is, you know, bringing the averages down. Net of fans, we've also done double-digit growth, across categories. So it's a fan, just to give you, you know, because you need to know what's happening. It's a fan. So, if you turnaround fan, then, you will see a very different number. Now, what's going to make that happen is, BLDC, as you know, we are, little late versus competition. We recognize that, and we are working on plans to sort of accelerate our, innovations in the market. So, we are building innovations and also building capacities. The one innovation which we have launched in the market, you know, which we're now, taking to various, states, has done very well. We are building capacities now, multifold versus where we are right now. And once those capacities are in place, which will be in the next, three to six months, fan should start, building rapidly, in terms of turnover and growth. So, then you will see a very different number, and that's what I can tell you right now.
Sameer Gupta (IIFL Capital): Got it, sir. Any particular reason why the non-BLDC category is showing such a sharp decline? Is it just got out of focus? Is it the market is moving towards BLDC and, and, and, we probably will take some time to ramp up? Because I believe that, even the non-BLDC portion, should there be a reason for it to decline so sharply?
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