Thanks, Pari. On behalf of ICICI Securities, we welcome you all to Q1 FY '27 results conference call of Bajaj Electricals Limited.

We have with us today senior management represented by Mr. Shekhar Bajaj, Chairman; Mr.

Sanjay Sachdeva, Managing Director and CEO; Mr. Vishal Chadha, COO, Consumer Products; Mr.

Rajesh Naik, COO, Lighting Solutions; and Mr. Ashween Anand, CFO.

Now, I hand over the call to the management for initial comments on the quarterly performance, and then we will open the floor for question-and-answer session. Thanks, and over to you, Shekhar sir.

Thank you. Good evening, ladies and gentlemen.

I'm Shekhar Bajaj. It's a pleasure to welcome you to our Q1 FY '27 earnings call.

We hope you've had an opportunity to review our financial results and earnings presentation, both of which are now available on the stock exchanges. It gives me great pleasure to say that we have started FY '27 on an encouraging note.

From an industry and macroeconomic perspective, the quarter played out against a backdrop of continued input cost inflation, uneven summer demand across categories, and the industry largely seeing calibrated price hikes. Against that environment, our team stayed laser-focused on execution, consolidating the channels, driving cost efficiency, and strengthening the foundation we built through FY '26.

The result is visible in our performance this quarter and gives us immense optimism for the road ahead. I'm glad to report that this quarter reflects exactly that direction.

We delivered a overall revenue only 2.3%. However, our EBIT margin improved to 6.6% from 2.5%.

I would say that this is a positive step towards implementing our learning through last year's actions. For a company that has stood for 88 years on the Bajaj Group's values, trust, transparency, and disciplined execution, I see this quarter as a evidence that those values are being reflected in how we run the business today.

The board and I remain confident in the direction we have set and excited about the momentum we are building. With that, I would like to hand over to Mr.

Sanjay Sachdeva, our MD and CEO, to take you through the operational and financial performance in detail.

Thank you, Chairman sir, and good evening, everyone. Thank you for joining the call this late.

I'm pleased to walk you through our through our start to financial year '27, which reflects good progress. We have started delivering top-line growth with meaningful margin expansion.

As the Chairman mentioned, our overall revenue grew by 2.3% year-on-year in quarter one, with consumer products growing at 1.7% after decline in multiple quarters for multiple quarters, and lighting solutions grew at 4.4%. Our EBIT margin improved to 6.6%, a many meaningful step-up that reflects the operating discipline that we have been building over the last several quarters.

Consumer products' return to growth and positive EBIT is a meaningful and positive mark step for us, especially after we have the steps we have taken in financial year 2026. It gives us more confidence to believe that we are on the right path.

This gives us more confidence. For this quarter, consumer products vertical was a story of two halves.

While the cooling products contracted, the non-summer products had a meaningful expansion and double-digit growth growth across categories. Moreover, Morphy Richards also grew double-digit post her acquisition in the last quarter.

Our our EBIT margin has expanded to 3.9% versus -1.7% on a year-to-year basis. This is primarily driven by expansion in our gross margin and efficiencies generated on account of operating leverage.

We are confident about our trajectory for this business, and our focus will be to sustain and improve this momentum. Lighting solutions continued to be the vertical carrying momentum for us.

Following a year in which it delivered one of the strongest growth in the industry, a 4.4% growth in this quarter on the top of that stronger base is a credible continuation. The growth was fueled with double-digit growth in consumer lighting.

We remain confident in this business as a structural margin and growth engine, including the newer categories we have entered. The 6.6% EBIT margin is very satisfying for us.

It reflects that the growth we delivered this quarter was earned through cost discipline, value engineering, and agile pricing actions that we have taken to offset commodity commodity inflation, even as top-line growth itself remained measured. Our foundation is strong, momentum is building, and opportunities ahead are significant.

We are confident in our ability to keep raising the bar by driving innovations, expanding our market shares, strengthening our brands, and demand generation to deliver consistent and profitable growth. With that, we now open to take questions.

Thank you.

Thank you for opportunity. My first question is related to the consumer products.

In the press note, you have mentioned despite a double digit of a growth in the appliances and the Morphy Richards, still we see 2% of a growth. Is the fan business remained very weak in terms of the volume declining or a limited ability to take the price hike or the both?

How has been? Where do you see the demand, pricing, and the margin for this segment to go ahead in the coming quarters?

Right. Yes, you're right.

Fans, as was mentioned in the opening remarks, saw a decline for us. As far as the price increases are concerned which you mentioned about, we kept pace as far as the commodity inflation was concerned.

Going forward, we see improvements in margins. This is essentially because of two reasons.

As was mentioned, we are looking at our continued focus on VAVE activities, and the second focus will continue in terms of looking at premiumizing our portfolio. Over a period of time, the BLDC contribution has continued to increase and so has the premium contribution.

I'm happy to say that from a premiumization point of view, our journey is going well. Going forward, we are far more optimistic as far as the margins are concerned and this business is concerned.

Related to that, sir, you are also highlighting the BLDC contribution to increase. How has been in the industry BLDC as a contribution right now?

Because we are hearing from every players regarding the BLDC contribution to increase, where do you see this BLDC as a industry contribution from right now to the way forward, where we will see this?

The estimates which we have on BLDC vary between 30% to 35%. We are slightly under-indexed versus the industry, but it's growing much faster, and we will be in our rightful share as we progress.

Right. The last question, sir, related to the lighting.

Lighting also, if I look at, especially on the margin front, we are nearly around single digit, around 7% odd. Do you believe this margin trend to improve from here with the mix B2C or the B2B changes and will expect it to drive these numbers from here?

This is Rajesh this side, and, as we mentioned in last call also, we are continuously chasing the premiumization and the mix change from our low-commodity products to the more premiumized products. We are driving that to have at least a trend towards going towards double-digit.

That is what the journey is, including B2B where we are trying to take the volumes up with contribution of high-margin projects to improve this particular margin. In this particular quarter in lighting, we have legacy projects in professional lighting where we are not able to take the prices up because the contracts were signed on the rates before the war.

However, commodity prices have gone up, we had to take a hit on the margin in professional lighting. That's getting reflected in the overall lighting business margin.

We believe in a quarter or two, as we exit some of these legacy contracts, we will build back our margins. We see it a temporary blip in our margin journey.

In a steady state, where do you see this margin to be?

Excuse me?

In

steady state? Once we are off this legacy project, will go back to double-digit margins in lighting, overall lighting.

Yeah. Thank you, sir, and all the best.

Thanks.

Yes. Sir, two questions.

One, in terms of the market shares, can you indicate whether we would have gained or anything that you can share? Also, secondly, Bajaj as a brand has one of the strongest reach in the entire market and one of the best known brand in rural markets, too.

What will be the in a way growth in rural markets, and how do you see the market shares in a way panning out in rural markets, too? Thanks.

Overall share trend is a mixed bag for us. In few categories, we have been growing share or stable.

We are stable in most of the categories and growing in iron and mixer-grinders. The one category which is large where, as explained earlier, we have not done as well as we want to is fans.

This is where we are losing share. We know why we're losing share, and we have corrective actions in place.

We intend to claw back on our share loss in next two or three quarters. We don't have any special share report for rural, very difficult to answer how we are performing there.

Needless to mention, if overall shares are either stable or growing for most of the categories, our rural shares and we are large player in rural, we should assume that our rural shares should be intact.

Surely, sir. Just last question.

In terms of distribution, what is the current strategy now, to focus on numerical reach expansion or to driving the throughput per store? Also, what will be share of e-commerce, modern trade, and alternate channels essentially?

What will be the plans to expand share in these alternate channels, too? That's it from my side.

Many thanks.

Okay. The first part was What was the first part of the question?

Numeric.

Numeric. Yeah.

The focus remains on both. While we have a very large numeric reach, but as market share is impacted by both numeric as well as the counter share.

We cannot let go of one and focus on another, we are focusing on both in a calibrated manner. While numeric reach continues to grow, we are equally mindful about our counter share, and the focus is on there also.

The second piece was on e-commerce. E-commerce contributes to approximately 15%, and again, depends on quarter to quarter depending on the festive or the same events which the e-commerce players do.

On an average, it's around 15%, which is in line with the industry. Alternate business contributes in all put together around 45%.

It's a 55-45 kind of a ratio, which in a few percentage points here and there, could be 57-43, but broadly it's 55-45. Alternate for us in this quarter has also grown very well.

E-commerce has grown in double digits. We have also almost doubled our exports.

Okay.

Good evening, sir. Thank you for the opportunity.

This is Achal from Nuvama. Sir, the first question I have with respect to the distribution change what we were undertaking, where are we in terms of that?

Backlog, is it done and dusted, or is it still going on, and how long will it take for us to see a normal growth?

We haven't talked about any distribution change per se, Achal. Our go-to-market continues to remain what it is.

If you are alluding to when we took stock correction

Yeah, stock correction. I'm sorry.

Okay. Yeah.

Right, right,

right. Okay.

Sorry for misunderstanding. Yes, we have taken stock correction, and we say it's an ongoing journey.

We continue to do whenever it's required in a calibrated manner. At overall level, our stocks are in much healthier position than what they were a quarter or a couple of quarters ago.

Understood.

Understood. On the GTM, since you thankfully raised that point, earlier, we were almost exclusively on the RREP program.

Sometime back, we kind of started working on direct distribution as well, direct dealers. If you could elaborate at this point in time how it is structured, and do you see any changes to that structure in next two, three, four years?

RREP, the full form of that essentially is reach and range expansion. Those are the common things which we continue to drive.

It's only the manner in which could differ. The bulk of our business still happens through the distributor channel.

In certain markets, we have already started kicking off our direct models where it is required. We have direct dealers which we are now reaching out to in parts of south, in parts of west.

Going forward, we will probably accelerate, depending on the geography, our direct distribution model.

Understood. Sir, my next question I have with respect to particularly the ECD margins.

If you could give us some sense, while I understand, obviously the margins have improved, they will continue to improve, but how long do you think it will take for us to go back to closer to 9%, 10% margin, what we could have had, say, about seven, eight years ago?

Let me take this. Ashween here.

See, our gross margins have improved by 150 bps at a company and especially in the consumer product segment, it's grown by 250 bps. This growth has come in from various factors.

It's coming from premiumization. It's coming from productivity-led initiatives across, better mix management, ROI-led investments, better commercial discipline.

We believe these current gross margins are sustainable directionally. Quarterly movements will depend on commodity prices, category mix, and competitive intensity.

Our focus is to keep improving the quality of the margins, and we do believe with the structural improvements that we've done, we should directionally move in the positive direction.

Got it. Any guidance or any thoughts on the normalization of the margins?

Will it take a couple of years, or you think it could be a little more longer journey?

Normally you're talking about here the EBIT bottom-line margins or gross margins?

ECD EBIT margins, sir. Because lighting, I think we are good now.

Like you've already talked about going to double digit, I understand that completely. I'm just curious for the consumer products margins, ECD.

As we always said, we intend to go to a 10% margin, which I didn't know we had six years back. I don't think we ever had it.

We're going to bring to that. I don't know.

Maybe if it was there in the history. We intend to go to 10% margin, which will be very close to industry-leading or close to industry top end of the margin.

We believe, as you can see the journey, we have very quickly ramped up our margins. We believe the first set of turnaround in margins will be quick and large, and the second set will be slow and longer because, first set of improvement is like low-hanging fruits, and you should be able to sort of deliver that quickly.

Answering your question, we do see our margins for next two years to stabilize between 6% to 7% because we would like to, at the same time, invest a bit more behind our brands. Once we have strengthened our brands and the scale coming, we will then build our margins further.

If there is a timeline, I will say certainly not next two years, but after that, you will see steady improvement towards 10%. That's all I can say.

Whether it'll take four years, five years, three years, that depends upon many other factors.

Got it. In terms of the competition specifically, are you seeing competition actually getting more intensified?

Everybody wants to do everything. Given our positioning at this stage in terms of the value for money, do you see that the market share improvement is more harder now to gain back compared to what it would have been, say, two years ago?

It's a two-way street to look at it. When everybody's entering, you can see the kind of growth the market is giving to everybody.

Market will expand when everybody comes. A lot of players comes because of the investment, because of the innovations, because of other initiatives everybody takes, education, because it's still a very underpenetrated categories most of them.

Coming more players not necessarily mean it's not good for the current players. Now, will the market share improve or decline or not is a question of how well you play with your brands, your innovations, technology, go-to-market initiatives.

We believe in that knowledge becomes important. While we have one brand, Bajaj, but we have another brand, Morphy Richards, which is a right space in terms of when the people premiumize is one of the brands which will gain.

Therefore, we do see many levers coming in as we get our act together. We don't think and that's not our play that our share will be questioned.

As I told you, except for fan, most of the categories, our shares are either stable or growing. Therefore, while, as I said, competition is heating up, but it's not something which is going to impact us too much in medium to long term.

Understood. Sir, I have couple of more.

If I may ask, with respect to wires contribution, is there is any contribution in the current year in the current quarter, ma'am, I mean?

That will be sometimes we don't tell. All that I can say that in wires, our progress is better than what you are expecting, and that gives us confidence that we can play a significant role moving forward to our business.

This will be part of the consumer product or the lighting segment,

sir? It's part of the lighting segment and including switchgears.

Got it. In terms of the net working capital, if you could call out net working capital days, how have they moved from a March to June quarter?

Yeah. Our working capital position, see, has improved.

On the debtor side, we've improved. On the overall inventory, however, slightly up, and the reason for that is because we've locked ourselves in some good inventories.

This is a seasonal period, we've increased slightly over there. Normally, broadly, it's in the range and largely hovering around between 50 to 60.

That's a larger trend. We see some build-up to happen because of the seasonal business, but overall they are tracking healthy.

We are there, in a space where we are looking at that and monitoring it very closely. We think that we are building up good inventory.

Got it. Any quantification you could give for the OCF during first quarter, cash flow from operation?

Yeah. See, overall cash flow has been negative.

The larger reason for that is because of some of the tax compliances we had to make on the Morphy acquisition for the TDS as well as on the GST. Hence, it's been negative.

Other than that, it's largely been healthy. If you remove that element out, it's been healthy.

Understood. Thank you.

I'll fall back in the queue for follow-up. Thank you so much.

Yeah. Thanks for the opportunity.

Firstly, great set of numbers. I see management are taking the right steps.

My first question is related to growth. Where do you see for this couple of years, this year and next year, what kind of growth can we expect in the top line?

There is a inflation part of it, so that is the one which is difficult to guess. Otherwise, you can assume from all the businesses put together, we are looking at between 8% to 10% growth quarter-on-quarter.

That's the number we're looking. This can vary a quarter here and there, but that's a kind of a ballpark number we are targeting.

This is not a forward-looking commitment, but this is the kind of targets which we are looking at, and we are therefore working towards opportunities to deliver these kind of numbers.

8% to 10% growth for two years, that's what we can think.

This is what we think. This assumption is industry will grow 6%, 7% minimum, it's staying ahead of the industry.

Now, if industry grows at three, it comes down to six and five. We believe industry is attractive and can give you a growth of 6%

to 7%. Understood.

Also, one question. Recently we are hiring a new CBO officer.

What are the areas are we looking at? I'm asking a little longer-term question for Bajaj Electricals.

As a long-term, what are the categories are we looking at? If you think of under your regime, right, longer-term, four to five years, you are coming from a larger-sized company, and you have joined here in one year.

We are trying to fix things. What is exciting you here for next three to five years?

You're talking about the new person who has joined?

New person and along with your journey also for three to five years, why you have taken up this role. Yeah.

Yeah.

The categories we operate itself is pretty attractive, you know. That gives you enough opportunities.

As I told you, penetrations are low. Market shares are, you're in a good positions in market share in most of the categories except for fan.

You see a long runway even on those in these categories to grow. Apart from that, there are quite a few things which is happening, when you look outside, whether it's a infrastructure which is getting created, which gives you a large amount of opportunities.

Question of how how much you want to grab, including, what we're doing in professional lighting, which you have seen. Or some of the transformation which is happening outside.

Few areas which we have already talked about and it is in the public domain like solar or wires we've got into, and then cables which we are seriously looking at. There are more areas when we see around and we see that there are possibilities we as a company to expand.

For obvious reasons, it is still at a very early stage to share, but this is exactly is the job the person who will come will do. The whole idea is how do we sort of create a company which is which is of a different kind and a different size as we see ourselves five years from now.

Consumer products will stay, and lighting will stay one of the businesses, but our assumption is it will be beyond that.

Okay. Okay.

After two years we stabilize, then we start venturing, or the simultaneous projects will keep starting, the pilot things?

Difficult to say, but our current assumption is those will start.

Okay. Okay.

Still on the meaningful way, maybe two years out we can see the numbers, but two years we can see that 8% to 10% growth we are looking for, right?

Yeah.

Okay. Okay.

Thanks. Thanks a lot.

Thank you for the follow-up opportunity, sir. Just sorry if I've missed out in the beginning if you have answered this.

In terms of the cost inflation, if you could give us some sense, what is the extent of cost inflation across our key categories like fans, mixies, water heater, and a couple of more? To what extent have we been able to take price increase, and how much more is expected?

Okay. See, across the categories, we've seen around depends on each category, but let's say ranging from 6% to 10%, that's the kind of number we've seen.

Where raw material inflation has been significant, we've taken selective price corrections depending on category elasticity and competitive intensity. As regards the future, see, the external environment continues to remain volatile, and we will assess the impact before taking any pricing decisions.

At this point in time, we are tenting. We'll have to see how the commodity prices move.

Between price increase and the savings opportunities, at this stage, and things can change, at this stage, we are not seeing major price increase need to meet our margin requirements for the rest of the year at this stage. Things are too volatile and things may change in two months' time.

This is the best we can say right now that our now focus is to drive growth because rest of the levers are in place.

Just a clarification, sir. 6% to 10% is the cost inflation across our key categories, have I understood right, or that was the price increase you have taken?

What was that?

Yeah. You're right.

It's as high as 13% in some categories. It's between 6% to coolers was the highest in terms of cost, right?

It is anywhere between 6% to about 11%, 12%, and most of that between pricing and savings, we have managed to sail through. Not everything we have put in price, of course.

Part has come through savings.

Understood. Understood.

Sir, I don't know if you could comment for each of our key categories, how the growth has been for the category and what is the sense in terms of the volume growth, because we think that the current growth was actually also on a low base. If you could give us some sense in terms of how the demand scenario has been, and if you could within that call out on the key categories like particularly fans, mixies, water heater, etc.?

First one correction. For us, as you remember, we had done stock corrections in quarter three and quarter four and partly in this quarter.

We had a higher base in quarter one and two because at that time, we were adding stocks. Just for your this thing that it was not a low base for us.

Number one. Number two is, as we told right in the beginning, that fans is one category for some external reason, internal reasons, we could not deliver growth, which is more operational issues than anything else.

Therefore, it was not a growth which we believe is one time, because if you see net of fans in last year, the season was not good. The net of fans, we had done well last year, and again net of fans, we have done well.

It's a trend for us.

Right. Yes.

Net of fans, it's a trend for us. Yeah.

We are clear it's the fans we have to sort out.

Got it. The demand scenario in general in terms of the rural

Hi, sir. Thanks for the opportunity.

Sir, I joined a little late. If you can give some more color on GTM, which you at that point, I started.

What exactly are we doing in GTM, and how we are expanding the distribution dealer network and touch point? Simultaneously, for logistics, what we are doing so that we can grow faster than the industry level?

I can comment on the GTM part of it. While we continue to expand distribution, and I had answered that question earlier, in a physical retail environment, we are expanding both our reach through the distributor network and also through direct dealers in a calibrated manner.

However, we're also seeing growth, we're talking about consumer reach over here, with other channels which are gaining prominence, for example, e-commerce, and within that, the quick commerce domain also. Any channel where the consumer is there, we are expanding and reaching out to the consumers.

Correct.

Sir, if you can share some color, how much of this coming to whether e-commerce and second is that through quick commerce, we are seeing the growth?

E-commerce has shown a double-digit growth in this quarter, and its contribution, as I mentioned earlier, varies between 15% to 20%, 15% to 18% broadly, depending on the quarter. Within that, the quick commerce space within e-commerce is growing rapidly and is approximately 8% to 10% of the total e-commerce business.

It is growing rapidly, but it's early days. It's still a relatively smaller business, but we are seeing rapid growth over there.

Sir, if you have to understand this off-market and through direct e-commerce or quick commerce, is there any pricing difference is there, or how do we make better margin, or if you can give some color directionally? How do we see to grab those market, either e-commerce or quick commerce better way?

Each of the channels, whether it is traditional, modern format, e-commerce, quick commerce, etc., they have their own structures, whether it's to do with cost or margin structures. We are in line with how the industry plays it out.

Our objective, as I stated earlier, is to reach the consumer in the most efficient manner, and that's where whenever the consumer is shopping, that's where we are.

Our focus there is get a transaction contribution more than what you get in general trade, and therefore, obviously, we look at each transaction value and net contribution from that value. If we're gaining on that, then it's a good business for us.

Within this GTM, if you can give some color, which are the geographic part where you see that there is a huge room for us to expand and compared to market, we are a little lower level?

From a geographical point of view, we are a little weak in the south markets, and we are the strongest in east.

Okay. Okay.

Sir, last question from my side, on the fan category, you said that because of unavailability of inventory, growth was a little lower. That, one of the largest player in fans also has faced same problem.

If you can elaborate, what are the key challenge that because of which, this whole supply chain issue and where are at this stage, is it correcting, or what specifically we are doing to improve upon?

That was more induced due to external factors like war, and we had challenges both in terms of gas shortages and to some extent, PCBs.

Okay. What are we doing to improve upon vis-a-vis industry level?

Gas is restored. Those issues are there.

PCBs is now we are working on a little longer time cycles to see that we have enough for our and then to be frank, we had not anticipated this kind of demand for BLDC fans, and that is where we use PCBs. Therefore, now we are working on different numbers and covering stocks for a longer period of production.

Sir. Thank you and all the best, sir.

Thank you.

Thank you very much for all the participants, and I'm glad that we've been able to turn around. As being mentioned by Sanjay and others that we are looking at the similar performance to be continued in future also.

Keeping that in mind, we're looking forward to a very good future for the next few years. The market is good.

It is going to be competitive, but the market expands actually when there are more competition, more people playing. I think we should be happy about that, and we've got a very strong team now.

Therefore, I think I'm very positive and very optimistic. Thank you.

Thank you.