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Strong earnings, stable outlook have driven this stock to new high; should you subscribe

Chitranjan Kumar     January 13, 2021

Shares of Bajaj Electricals jumped over 17 per cent in intra-day trade to hit a fresh record high of Rs 838 on the Bombay Stock Exchange on Wednesday amid hopes of a robust revenue growth in the consumer products segment in near-term. The Bajaj Group company shares were trading higher for the ninth consecutive session. It has gained as much as 222 per cent over the last nine months, from its 52-week low of Rs 260 as on April 3, 2020, and 37 per cent thus far in the month of January 2021. The reason behind its massive rally is healthy quarterly results, stable rating outlook and strong performance of consumer durables business.

Extending rally, Bajaj Electricals share price opened flat at Rs 712.85 and slipped into negative terrain to hit intra-day low of Rs 709.65. During the day's trade, the stock gained as much as 17.55 per cent to hit 52-week high of Rs 838, before closing at Rs 819, up 14.89 per cent. The market capitalsation of the stock increased to Rs 9,332.57 crore.    

On the volume front, there was surge in buying as 1.52 lakh shares changed hands over the counter as compared to two-week average volume of 0.22 shares on the BSE.   

Last month, ICRA had reaffirmed long-term and short-term rating of the company's line of credit, along with its non-convertible debenture (NCD) programme. The outlook on the said long-term and NCD rating has been revised to 'Stable' from 'Negative'. The ratings factored in the healthy performance of the company's consumer durable business segment, diversified business portfolio, healthy revenue growth and financial flexibility from being part of Bajaj Group.

For July-September quarter of the current fiscal, Bajaj Electricals posted consolidated net profit of Rs 53.11 crore against net loss of Rs 32.54 crore in the year-ago period. The total revenue from operations rose by 11.1 per cent YoY to Rs 1,217.71 crore in Q2 FY21. During the quarter under review, consumer products business posted total revenue of Rs 792 crore, registering a YoY growth of 12.9 per cent.

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