Bajaj Electricals demonstrates a significant improvement in operating margins driven by cost control and product premiumisation, with the consumer division returning to growth despite supply chain disruptions, signalling a resilient recovery amid macroeconomic challenges.
Bajaj Electricals said its first-quarter earnings showed a sharper operating turnaround, with consolidated EBIT margin rising to 6.6% from 2.5% a year earlier as tighter cost control and a better product mix helped offset only modest top-line growth. The company reported revenue growth of 2.3% for the quarter, but said the improvement in profitability reflected premiumisation, productivity gains and stronger gross margins across the business.
The clearest recovery came in Consumer Products, which returned to growth with revenue up 1.7% and moved back into positive EBIT territory at 3.9%, after a loss in the same period a year earlier. Sanjay Sajdeva, the managing director and chief executive, said the business is targeting 8% to 10% annual revenue growth, assuming the market expands by 6% to 7%, while margins in the consumer arm are expected to hold in a 6% to 7% range for the next two years as the company continues investing in its brands.
Within that division, the fan category remained the weak spot. Management said supply chain disruptions involving gas shortages and printed circuit board availability had hurt output and market share, although those issues have now been addressed. Vishal Chadda, the consumer products chief operating officer, said the company is working to regain lost share over the next two to three quarters, while also leaning harder into higher-margin products such as BLDC fans and the Morphy Richards brand, which grew at double-digit rates.
Lighting Solutions also delivered steady progress, with revenue up 4.4%, driven by double-digit growth in consumer lighting. Rajesh Naik, the lighting chief operating officer, and Sajdeva said margins were temporarily pressured by older project contracts in professional lighting that could not absorb recent commodity inflation, but they expect the segment to return to double-digit margins once those contracts roll off. Gross margin improved by 130 basis points company-wide and by 220 basis points in Consumer Products, helped by a richer mix and operating efficiencies.
The company also pointed to a broader shift in how it reaches customers. E-commerce grew at a double-digit pace and now contributes roughly 15% of sales, while quick commerce is emerging as a faster-growing slice of that channel. Exports nearly doubled, and Bajaj Electricals is also widening its direct dealer network in parts of southern and western India. Ashwin Anand, the chief financial officer, said input cost inflation remained elevated across categories, especially in coolers, but selective price increases and savings had so far helped absorb the pressure. He also said operating cash flow was weighed down in the quarter by tax-related payments linked to the Morphy Richards acquisition and GST, even though the underlying business remained healthy.
Disclaimer: This article is intended to inform and educate, not to recommend or endorse any financial product, investment or strategy. Please consider your own financial circumstances and seek professional advice where appropriate before making financial decisions.
