Bajaj Electricals at 2-month high on restructuring plan; up 27% in 6 days

The stock rallied 6% to Rs 1,329.75 on the BSE in Friday's intra-day trade

Shares of Bajaj Electricals hit a two-month high of Rs 1,329.75, ralling 6 per cent on the BSE in Friday's intra-day trade, in an otherwise weak market. The stock of the household appliances companies has surged 26 per cent in the past six trading days, after the company said it will review its existing corporate structure due to the nature and potential opportunities of each of its business segments.

The stock was quoting at its highest level since October 4, 2021. It had hit a 52-week high of Rs 1,588.55 on September 17, 2021. At 01:34 pm, Bajaj Electricals was trading 4 per cent higher at Rs 1,307, as compared to a per cent decline in the S&P BSE Sensex.

"Considering the varied nature and potential opportunities of each of the business segments and the need for a focused approach to unlock these opportunities, the board of directors of the company has decided that the Company should undertake a comprehensive review of the existing corporate structure," Bajaj Electricals had said in a press release on December 9, 2021.

The company is currently engaged in the business of consumer products (includes appliances, fans and consumer lightening products), and engineering procurement and construction segment (which includes power transmission and power distribution and illumination projects).

The review will encompass an evaluation of full range of options and alternatives including demerger, subsidiarisation and strategic partnerships among various possibilities.

The management said this will allow them to create independent, industry leading and competitive entities– each of them with sharp organisational focus, appropriate capital allocation and required agility to drive long-term value creation for customers, employees and investors.

In September quarter, the company's consumer products business delivered top-line growth and has maintained earnings before interest tax (EBIT) margins over the previous year quarter despite the significant impact of price rise of commodities. EPC segment has delivered an EBIT loss but continues to focus on project execution and remains cash flow positive, the management said.

As on October 1, 2021, the company's order book stood at Rs 758 crore, comprising of Rs 445 crore for transmission line towers, Rs 77 crore for power distribution, and Rs 236 crore for illumination projects.