ICICIdirect has recommended 'Buy' on Bajaj Electricals with target price of Rs 326 as against current market price (CMP) of Rs 230 in its report.

Commenting on the investment rationale, the stock broker said, "Bajaj Electricals reported 7% YoY revenue growth of Rs 10.30 billion during Q2FY15, led by the E&P and consumer durable (CD) business. However, lighting segment revenues declined 10% YoY due to 12% YoY decline in CFL sales. In addition, the luminaries segment recorded flattish growth during same period.

The CD segment recorded 3% YoY revenue growth led by appliances business and Morphy Richards products, which recorded growth of 4.3% and 21% YoY, respectively. However, the fans business recorded a drop of 5% YoY in revenue.

The E&P segment witnessed 33% YoY revenue growth as the company has largely focused on maintaining margins. The EBIT loss narrowed down substantially YoY from Rs 430 million to Rs 280 million in Q2FY15. The loss is largely attributable to a sharp rise in employee cost. The current order book stands at Rs 31 billion.

Although a reduction in losses in E&P helped the margin recovery, other two segments, lighting and CD saw a decline in EBIT margin by 479 bps and 253 bps YoY, respectively, due to subdued CFL sales and higher stocking on account of a delay in festive demand.

We roll over our valuation on FY17E, considering a revival in the Indian economy wherein BEL, a strong CD brand, is well positioned to benefit. We build a conservative margin for FY16E-17E and expect a turnaround in the E&P business from FY15E onwards."

Disclaimer: IRIS has taken due care and caution in compilation of data for its web site. Information has been obtained by IRIS from sources which it considers reliable. However, IRIS does not guarantee the accuracy, adequacy or completeness of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information. IRIS especially states that it has no financial liability whatsoever to any user on account of the use of information provided on its website.