Bajaj Electricals Limited — Q1 FY26 earnings call

Call held 7 Aug 2025

Management summary

Bajaj Electricals faced significant headwinds in Q1 FY26 due to unseasonal rains impacting seasonal consumer products, leading to substantial degrowth in fans and coolers. However, the non-seasonal consumer products and the Lighting Solutions vertical performed strongly, with Lighting achieving its highest-ever EBIT margin of 10.6%. The company is strategically expanding into switchgear products and restructuring its non-core Nirlep business to enhance focus and profitability.

Highlights

  • Lighting Solutions vertical delivered a standout performance with 10.6% EBIT margin, its highest ever.

  • Non-seasonal consumer products achieved high single-digit revenue growth.

  • Consumer Lighting witnessed double-digit value growth in general trade.

  • Company is entering the synergistic switchgear products segment, targeting 10-15% contribution to Lighting by FY26.

  • Management reported positive momentum in market share across all categories this quarter.

Concerns

  • Overall seasonal revenues (Fans, Coolers) were down in high double digits due to unseasonal rains.

  • Coolers experienced ~45% degrowth, and Fans saw a double-digit decline.

  • Company-level EBIT was 2.5%, attributed to operating deleverage.

  • The Nirlep business is being restructured due to being a financial drag and lack of synergy.

Key financials

  1. Company Level EBIT 2.5%
  2. Brand Investment 4%

What they filed

Q1 FY27: revenue up 2.3%, net profit up 4700.0% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue1,118 1,290 1,265 1,065 1,107 −1%1,051 −19%1,240 −2%1,089 +2%
EBITDA52 87 93 33 57 +10%8 −91%40 −57%77 +133%
Net profit13 33 59 1 10 −23%-34 −203%-68 −215%48 +4700%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

  • Lighting Solutions
    10.6% EBIT Margin— Value Growth
  • Consumer Products (Seasonal)
    — Revenue Growth
  • Consumer Products (Non-seasonal)
    — Revenue Growth
  • Coolers
    0.45 decimal fraction Degrowth
  • Fans
    — Decline
  • Consumer Lighting (General Trade)
    — Value Growth

Order book

medium confidence

Total value

₹210 Cr

as of 2025-06-30 quantified

Good traction in B2B Lighting with infrastructure projects coming in, expecting good growth in the next 2-3 quarters.

Source: Q&A

Capital allocation

high confidence
  • Capex ₹140 Cr
    • New product development
    • Evaluating new factory
    So, we will be predominantly investing on new product development. And you have already seen in March, the budget approved is about Rs. 140-odd crores. Plus, we are also evaluating the new factory. And as and when it comes up, we will let you know.
  • M&A Nirlep business Divestment · Announced

    Nirlep is a totally different GTM. And we have realized that instead of focusing too much on different spaces, it is better to concentrate on our core, because Nirlep is a totally different go-to-market. There is no synergy, and the factories of Nirlep were making losses. So, that is the reason we thought it is best to look at alternatives and concentrate on the core.

    Currently a drag on financial results.

    We have taken an in-principle approval of restructuring our Nirlep business, which currently has a drag on our financial results.

Guidance & targets

Market Share

  • Contribution of Switchgear to Lighting segment Market Share · FY26 · Medium confidence 10-15%
    And then we are targeting 10% to 15% by this financial year.

    — Rajesh Naik

Capex

  • FY26 Capex Capex · FY26 · High confidence ₹140 crores
    And you have already seen in March, the budget approved is about Rs. 140-odd crores.

    — EC Prasad

What to watch in Q2 FY26

Performance of seasonal consumer products (Fans, Coolers)

Next quarter (Q2 FY26) and festive season.
Current Coolers ~45% degrowth, Fans double-digit decline in Q1 FY26.
Target Recovery/improved performance, especially during festive season.

Why it matters

These products were significantly impacted in Q1; their recovery is crucial for overall consumer products segment.

Very difficult to comment. It all depends on how the season plays out. So, we are all looking at this festive season very keenly. And probably once we see a good festive season, then we can comment on that. But after having seen Q1, I think we cannot comment on what the year is going to look like.

Risks & concerns

  • Unseasonal weather impact on seasonal product demand

    high

    Early and unseasonal rain in May disrupted summer demand for fans and coolers, leading to significant degrowth in these categories, though management believes it's a 'one-off trend'.

    Management acknowledged

  • Market share loss in core categories

    medium

    Analyst raised concern about continued market share loss, but management asserted 'positive momentum' across all categories this quarter.

    Analyst downplayed

Q&A highlights

7 direct
Impact of unseasonal rains on Fans, especially TPW vs Ceiling Fans and regional impact. Direct
Yes. So many questions. Vishal here. I will first answer the impact. Yes, you are right, the TPW fans got impacted significantly higher than the Ceiling fans' business for us. And our dependence on TPW is stronger in the regions of East and South, and that is where the impact was felt the highest.

Clarifies the specific product and regional impact of the weather, indicating vulnerability in certain segments.

Asked by Aniruddha Joshi

Inventory levels after seasonal disruption. Direct
So, just to give you a perspective, inventory is not in that precarious condition as far as we are concerned. And the cooler advanced billing in July has already started off well. So, we do not foresee any major issue as far as inventory buildup for coolers is concerned.

Addresses a key investor concern about potential inventory overhang after a weak seasonal quarter.

Asked by Aniruddha Joshi

Strategy and financial impact of entering the switchgear segment. Direct
So, this is Rajesh here. And to be very open in terms of what we are trying to foray into is mostly a residential segment where we are strongly present through Consumer Lighting channel, and we are not looking at MV or HV switchgears. So, it is actually adjacency to our standard channel, and where the brand is strong and our reach is much higher. So, that is where we want to start. And I will not be able to give you the forecast in terms of what is the percentage of mix that will come in. But yes, we are looking at the industry size, we can see in the near future it can contribute to that 10% -15% contribution coming from there.

Details the strategic rationale, target market, and potential revenue contribution of a new product category.

Asked by Achal Lohade

Impact on margins from new switchgear segment and investment plans. Direct
So, Achal, initially, what we will be focusing on is capturing some of the markets. So, it's not so much about margins. So, we would like to maintain the same margin... Also, one more point, that we are not planning to do any major investment in this area, we will be mostly sourcing from outside.

Clarifies that the new segment is not expected to be a margin drag and will be asset-light, addressing concerns about capital deployment.

Asked by Achal Lohade

Reasons for restructuring the Nirlep business and its future. Direct
So, Nirlep is a totally different GTM. And we have realized that instead of focusing too much on different spaces, it is better to concentrate on our core, because Nirlep is a totally different go-to-market. There is no synergy, and the factories of Nirlep were making losses. So, that is the reason we thought it is best to look at alternatives and concentrate on the core.

Explains the strategic decision to exit a non-core, loss-making business, signaling focus on core profitability.

Asked by Achal Lohade

Market share trends in consumer products, specifically challenging the analyst's premise of market share loss. Direct
So, Achal, I think there has been a positive momentum in this quarter as far as the market share is concerned across all the categories.

Provides management's perspective on market share, which contradicts the analyst's observation, suggesting a potential positive trend.

Asked by Achal Lohade

Outlook for water heater growth and whether the Q1 momentum is sustainable. Partial
So, our guess estimate on this is that it is because of the early onset of monsoon, and typically the sales of water heaters do tend to pick up during that period, so that has been a reason for the positive momentum also... It really depends on, as EC just explained in the previous question, that it all depends on how the season pans out, and we remain cautiously optimistic.

Indicates that the strong growth in water heaters might be seasonal and not necessarily a sustained trend, highlighting demand volatility.

Asked by Natasha Jain

B2B Lighting growth outlook and order book. Direct
B2B: Good traction, infrastructure projects coming in. We are on the winning track for major projects. And we see in the next two-three quarters, we should be able to show good growth in the B2B segment as well... It is around Rs. 210 crores is the order book what we have as of now.

Provides specific B2B order book value and positive outlook for this segment, which is a key growth driver.

Asked by Dhruv Jain

2 min read 6 chapters

Detailed narrative

Impact of Unseasonal Rains on Seasonal Consumer Products

Bajaj Electricals experienced significant volatility in Q1 FY26 due to early and unseasonal rains in May, which cut the summer season short. This disruption severely impacted demand for seasonal consumer products, leading to a ~45% degrowth in coolers and a double-digit decline in fans. Management believes this is a 'one-off trend' for the fiscal year, but it caused overall seasonal revenues to be down in high double digits.

Strong Performance of Lighting Solutions Vertical

In contrast to the seasonal consumer products, the Lighting Solutions vertical delivered a standout performance, achieving its highest-ever EBIT margin of 10.6% since its formation in 2022. This segment recorded single-digit value growth, with Consumer Lighting witnessing double-digit value growth in general trade. The company also improved its share in high-margin products like ceiling and outdoor lights, and Professional Lighting showed good growth.

Strategic Entry into Switchgear Products

Bajaj Electricals is strategically entering the switchgear products segment under its Lighting Solutions vertical. This move is synergistic, leveraging the company's existing strong brand, reach, and distribution channel, particularly in the residential segment. Management anticipates this new segment can contribute 10-15% to the Lighting segment's revenue by FY26, with minimal capital investment as it plans to mostly source products from outside.

Restructuring of Nirlep Business

The company has received in-principle approval to restructure its Nirlep business, which has been a drag on financial results. Management explained that Nirlep has a distinct go-to-market strategy with no synergy with the core business, and its factories were operating at a loss. The decision reflects a strategic focus on core profitable operations, though the Bajaj brand will continue to offer cookers.

Capital Expenditure and New Product Development Focus

For FY26, Bajaj Electricals has an approved budget of approximately ₹140 crores for capital expenditure, primarily focused on new product development. The company is also evaluating the possibility of a new factory. New Product Development is a key strategic pillar, expected to contribute close to 40% of the company's revenues in the future, indicating a strong emphasis on innovation and portfolio expansion.

Market Share and Inventory Management

Despite the challenging quarter, management asserted that the company experienced 'positive momentum' in market share across all categories. Regarding inventory, particularly for coolers, management stated that inventory levels are not in a 'precarious condition' and that advanced billing for coolers in July has started well, mitigating concerns about inventory buildup.

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