The stock of Bajaj Electricals, rallied more than 5 per cent on Monday, after securing eight new orders totalling ₹518.46 crore from the Madhya Pradesh Government for rural electrification work.

Bajaj Electricals is a consumer durables manufacturer that has also diversified into building transmission line towers and high masts and poles. The latest order win is for the company's Engineering and Projects (E&P) segment.

Only last month, the company won orders worth ₹602 crore - two for transmission lines (from Power Grid Corporation and West Bengal State Electricity Transmission Company) and two for rural electrification from West Bengal and Bihar state governments.

The company’s order book now stands at ₹3178 crore, up from about ₹1,465 crore in December 2013.

Revenue growth

The E&P segment contributes about a fourth of the company’s revenues. The revenues within this segment have grown by 21 per cent annually from 2006-07 to 2011-12.

However, the company started to witness problems in 2012-13. Delay in project executions and increase in labour and other costs hit the margins. To speed up work at existing sites and free up working capital, the company avoided bidding for new orders. As a result, revenues took a knock too.

Project orders

However, beginning 2013-14, the company started handing over projects to clients. By the second quarter, it also started bidding for new orders.

Since then, in the last one year or so, the company’s order book has grown significantly. In the recent June quarter, the company reported loss at the operating level in the E&P segment.

However, the prospects for the E&P segment are likely to improve, on the back of growth in revenues and profits, with the management indicating that the new orders will fetch higher margins.

Related Topics
comment COMMENT NOW