June 20, 2011

Bajaj Electrical Limited

Capital Goods Electric Equipment We wish to inform you that we recently met the management of Bajaj Electrical Limited and the following are the key takeaways from the meeting. Company Description: Bajaj Electricals Limited (BEL) is a diversified electrical company and is a subsidiary of Bajaj Group. The company manufactures, erects and commissions telecom towers, wind energy towers, transmission line towers and mobile telecom towers. Products offered by the company include microwave ovens, juicers & mixer grinders, lamps, tubes, fans, torches, water filters, oven toaster grillers, personal coolers, sandwich toasters, steam & dry irons, desert coolers, room heaters and toasters. The company operates through five strategic business units, namely, Home Appliances, Fans, Lighting, Luminaries and Engineering & Projects. Key takeaways: Management expect topline to grow by 20-22% in FY12. Management will be implementing Theory of Constraints which will help the company to maintain/manage certain buffer inventory. Order book of the company currently stands at ~`800cr and provides revenue visibility for next 1-1.5 years. Around `150cr order book will be completed within 3-6 months and remaining within 1-1.5 years. The company expects increased orders in the domestic markets. In the E&P segment, management remains cautious due to the intense competition and plans to participate in projects without compromising too much on profitability. The company has bid for about `1,000 crores of TLT business, `100 crores Highmast and street lights and `726 crores of lighting projects. Management expects order inflow for FY12 to be around `1200cr Plans to launch Bajaj Shopping stores across India. Recently, opened its first Bajaj Shopping shop at Dadar, Mumbai and plans to open around 20-25 shops in FY12. Bajaj Shopping stores will sell all the Bajaj Electrical products & Morphy Richards products (premium category) under one roof. Company plan to launch 4 new products such as Water purifier, Water pumps, Pressure cooking and Industrial fans by FY12E. Huge distribution network across India Company will be spending around 2-2.5% of its revenue on advertisement expense. Debt, which is primarily working capital related currently stands at `130 crores. Average Interest rate for FY11 was 9.5%; however expected to be up over 100 bps in FY12E. Capex for FY12E is `50cr.

Management Visit Note Not Rated

BJEL.BO, BJE IN CMP: `254 Price Target: UR

Tushar Das
(91-22) 3028-4714 tushar.das@uljk.in ULJK Financial Services Private Limited

Market Data Market Cap. (Rs Mn) Outstanding Shares (Mn) 52 Week High/Low (Rs) Avg. Volume Face Value Shareholding Promoter MF/ Banks/ Indian Fis FII/ NRIs/ OCB India Public/ Others

24625 98.5 347/190 18797 2.0 % 65.2 11.3 8.9 14.6

Nifty and Stock Movement

BJE Price 180.00 160.00 140.00 120.00 100.00 80.00 60.00 40.00 20.00 NIFTY

Sep-10

Feb-11

May-11

Jun-10

Dec-10

Aug-10

Jan-11

Financial Performance of the Company

(` in mn) Net Sales - Growth EBITDA EBITDA Margins Adj. PAT EPS P/E EV/EBITDA
Source: Company, ULJK Research

FY07 10,773 27% 854 8% 385 44.6 5.7 4.7

FY08 13,732 26% 1,419 10% 731 42.3 6.0 4.4

FY09 17,641 27% 1,782 10% 891 51.6 4.9 3.2

FY10 22,272 26% 2,419 11% 1,171 12.0 21.1 10.4

FY11A 27,394 22% 2,566 9% 1,438 14.5 17.4 9.8

Please refer to the important disclosures and analyst certifications at the end of the document

ULJK research reports are available on Bloomberg (ULJK <Go>

Nov-10

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Jun-11

Jul-10

Bajaj Electrical Ltd.

Average working capital day requirements are as follows: Lighting - 2-2.5 months Appliances - 25 days Engineering & Project - 6-7 months Average Inventory days are as follows Lighting - 1 month Appliances - 1 month The company would focus on selling its low-end products in fans, irons, toasters and CFLs in the rural segment. This plan is to ensure that the rural foray brings in 10% additional sales in the next couple of years. Market share segment wise are as follows: Lighting & Luminaries - 8% Fans - 16% Appliances - 15%

. Valuation: At CMP 254, the stock is trading at P/E 17.4x FY2011. We intend to initiate coverage on the stock and recommend the stock with positive outlook view.

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Bajaj Electrical Ltd. Financial Statements Rs in Million

Cash Flow Statement Cash Flow Summary Cash and Cash Equivalents at Beginning of the yea Net Cash from Operating Activities Net Cash Used in Investing Activities Net Cash Used in Financing Activities Net Inc/(Dec) in Cash and Cash Equivalent Cash and Cash Equivalents at End of the year Ratio Analysis Key Ratios Debt-Equity Ratio Long Term Debt-Equity Ratio Current Ratio Turnover Ratios Fixed Assets Inventory Debtors Interest Cover Ratio PBIDTM (%) PBITM (%) PBDTM (%) CPM (%) APATM (%) ROCE (%) RONW (%) DUPONT MODEL NP / PBT (X) PBT / EBIT (X) EBIT / Sales (X) Sales / Assets (X) Assets / Equity (X) ROE FY06 167 221 (125) (72) 24 191 FY06 2.4 1.22 1.23 FY07 191 293 (243) 53 103 294 FY07 2.3 1 1.2 FY08 294 592 (226) (341) 26 320 FY08 1.75 0.68 1.24 FY09 320 1,510 (421) (871) 219 538 FY09 1.13 0.46 1.28 FY10 538 48 (384) 411 74 612 FY10 0.51 0.26 1.45

COMPANY/FINANCE/PROFIT AND LOSS/51/Bajaj ElectricalCmbDetail0CmbCommonsize0CmbAnnual0 Profit & Loss Statement FY06 FY07 FY08 FY09 FY10 INCOME : Net Sales 8,490 10,852 13,816 17,657 22,286 Other Income 95 66 94 128 254 Stock Adjustments 116 77 392 74 332 Total Income 8,701 10,994 14,302 17,859 22,872 Total Expenditure 7,969 10,066 12,776 15,963 20,409 Operating Profit 732 929 1,526 1,896 2,463 Interest 199 253 338 413 370 Gross Profit 533 676 1,188 1,483 2,093 Depreciation 64 73 75 86 92 Profit Before Tax 469 603 1,114 1,398 2,001 Tax 171 217 383 506 830 Reported Net Profit 298 385 731 891 1,171 Extraordinary Items (0) 1 5 (2) (5) Adjusted Net Profit 299 385 726 893 1,176 Balance Sheet SOURCES OF FUNDS : Share Capital Reserves Total Total Shareholders Funds Total Debt Total Liabilities APPLICATION OF FUNDS : Net Block Capital Work in Progress Investments Total Current Assets Total Current Liabilities Net Current Assets Miscellaneous Expenses not written off Deferred Tax Assets Deferred Tax Liability Net Deferred Tax Total Assets 200603 102 805 908 1,928 2,836 940 0.3 149 4,385 2,559 1,826 6.3 34 121 (87) 2,836 200703 86 1,082 1,168 2,372 3,540 909 5.7 223 5,656 3,181 2,475 0.2 47 119 (73) 3,540 200803 173 1,562 1,735 2,367 4,102 916 3.0 223 7,085 4,084 3,000 77 118 (41) 4,102 200903 173 2,277 2,450 2,139 4,589 946 24.8 316 9,038 5,704 3,334 85 117 (32) 4,589 201003 195 4,749 4,944 1,518 6,462 1,016 0.9 366 11,990 6,916 5,074 118 113 5 6,462

7.6 9.2 3.8 3.4 8.3 7.6 6.1 4.1 3.4 26.2 41.7

9.0 10.0 3.5 3.4 8.3 7.7 6.1 4.1 3.5 27.8 41.5

10.8 10.0 3.6 4.3 10.9 10.3 8.5 5.7 5.2 39.0 54.1

12.8 10.5 3.6 4.4 10.6 10.1 8.3 5.5 5.0 42.6 44.7

14.7 11.6 3.4 6.4 11.0 10.5 9.3 5.6 5.2 43.7 32.5

0.6 0.7 0.1 3.2 3.8 42%

0.6 0.7 0.1 3.4 3.5 42%

0.7 0.8 0.1 3.6 2.8 54%

0.6 0.8 0.1 4.1 2.2 45%

0.6 0.8 0.1 4.0 1.5 33%

Source: Company, Capitaline, ULJK Research

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Bajaj Electrical Ltd.

Research Desk Institutional Sales Desk Disclosure Appendix

Tel: 022 - 3028 4719 Tel: 022 - 2272 1687

ULJK Financial Services Pvt Ltd: (Time range 12 months) BUY: Returns>20%; ACCUMULATE: 5%<Returns<20% ; HOLD: -5%<Returns<5%, REDUCE -20%<Returns<-5% and SELL: Returns<-20% Analyst(s) holding in the Stock : Nil

Analyst Certification The research analysts, with respect to each issuer and its securities covered by them in this research report, certify that: All of the views expressed in this research report accurately reflect his or her or their personal views about all of the issuers and their securities; and no part of his or her or their compensation was, is, or will be directly or indirectly related to the specific recommendations or views expressed in this research report.

General Disclaimer This report has been prepared by the research department of ULJK Financial Service Pvt Ltd. is for information purposes only. This report is not construed as an offer to sell or the solicitation of an offer to buy any security in any jurisdiction where such an offer or solicitation would be illegal. We have exercised due diligence in checking the correctness and authenticity of the information contained herein, so far as it relates to current and historical information, but do not guarantee its accuracy or completeness. The opinions expressed are our current opinions as of the date appearing in the material and may be subject to change from time to time. Prospective investors are cautioned that any forward looking statement are not predictions and are subject to change without prior notice. ULJK Group or any of its affiliates or employees shall not be in any way responsible for any loss or damage that may arise to any person from any inadvertent error in the information contained in this report. ULJK Group or any of its affiliates or employees do not provide, at any time, any express or implied warranty of any kind, regarding any matter pertaining to this report, including without limitation the implied warranties of merchantability, fitness for a particular purpose, and non-infringement. The recipients of this report should rely on their own investigations. ULJK Group and/or its affiliates and/or employees may have interests/ positions, financial or otherwise in the securities mentioned in this report. Opinions expressed are our current opinions as of the date appearing on this material only. While we endeavor to update on a reasonable basis the information discussed in this material, there may be regulatory, compliance, or other reasons that prevent us from doing so. This report is not directed to or intended for display, downloading, printing, reproducing or for distribution to or use by any person in any locality, state and country or other jurisdiction where such distribution, publication or use would be contrary to the law or regulation or would subject to ULJK Group or any of its affiliates to any registration or licensing requirement within such jurisdiction.

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