Bajaj Electricals (BJE) stock closed higher by 0.26% on the BSE. The company bagged orders for Rural/Urban Electrification projects in the State of Uttar Pradesh from Madhyanchal Vidyut Vitaran Nigam Limited (MVVNL) aggregating worth Rs3,577.93cr.

The projects shall be completed within 15 months from the date of issue of LoI, the company said in the filing.

The scrip opened at Rs612 and has touched a high and low of Rs633.90 and Rs611 respectively.

In engineering and projects (E&P) solutions, BJE is developing EHV sub-stations, installing underground EHV cables and pursuing overseas opportunities. Further, government’s thrust on strengthening power T&D is expected to lift E&P sales to ~11% CAGR (FY18-20E). In Consumer Durables (CD) strong presence in tier 2 & 3 cities will help it leverage on increasing demand. Further, implementation of Range and Reach Expansion Programme (RREP) will lead to direct sales and quick replenishment of inventory. This will help BJE gain back its market share and expand margins to 7.4% by FY20E (vs. 6.6% in FY18E). We expect sales and PAT CAGR of ~12%+ and 26% CAGR (FY18-20E) respectively led by volume growth and margin expansion in both segments. BJE’s asset light CD business (~ 90% of products are outsourced) will ensure superior returns (ROCE 30%+) by FY20E.

In 9MFY18, BJE derived ~51% of revenue from CD and ~49% from E&P (which includes ~26% from lighting division). BJE’s order book of ~Rs3,000cr in E&P provides healthy revenue visibility.BJE trades at P/E of ~26x FY20E.

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