"Bajel Projects: Connecting Communities with Reliable Energy!"

[Abhijay]

"Bajel Projects: Connecting Communities with Reliable Energy!"

INTRODUCTION
Incorporated in 2022, Bajel Projects Ltd is in the business of Engineering, Procurement and Construction. Bajel Projects Limited (BPL) is a carved out legal entity from Bajaj Electricals Ltd. It’s EPC segment comprises of Power Transmission & Power Distribution. BPL provides end to end solutions ranging from inhouse design, testing, procurement, manufacturing, installation & commissioning of the projects.

• Market Cap ₹ 2,908 Cr.
• Current Price ₹ 252
• Stock P/E 114
• ROCE 6.19
• Promoter holding 62.6 %
• Debt to equity 0.32

Overview

1.BUSINESS OPERATIONS

Key operations areas
Power Transmission
Power Distribution
International EPC
Monopoles
New Sector Co. is venturing into

Power Transmission:
This vertical has 3 subsegments namely Transmission lines, EHV Substations and EHV Underground cables, and has executed 7,000+ km of extra high voltage transmission lines and 40+ extra high voltage AIS /GIS substation projects providing electricity.
It has 25+ projects under execution with various states, central and private utilities

Power Distribution:
Company executes projects for construction of new infrastructure and augmentation of existing infrastructure for power distribution companies and agencies through Rural / Urban Electrification Primary Distribution Substation, Underground Cabling.

International EPC:
Company is equipped to meet the technical requirement of international projects with in-house design and engineering teams, tie-ups with Indian and foreign vendors, in-house Monopoles / Lattice Tower, manufacturing facilities and site execution teams Expanding globally with key projects in Africa, including electrification of villages. Securing distribution of orders for monopoles in various countries

Monopoles:
In-house design teams that manufacture a wide range of transmission and distribution poles .These steel monopoles have many advantages over standard lattice towers like space utilisation, shorter construction time, and environmental benefits .Bajel’s monopoles are witnessing increased popularity across India from clients

Sunrise Sectors:
🛜Data Centres: Entering the data centre construction and maintenance sector
Energy Storage Solutions: Developing systems for storing excess renewable energy
Metro Rail Projects: Expanding into urban metro rail construction
Renewable Energy: Focusing on solar and wind energy projects

2.SECTOR DETAILS
Renewable Energy is different in the sense that it needs to travel further distances, as the point of production is usually far away from where it’s finally consumed (eg. winds farms in Tamil Nadu may be producing energy to be consumed in Delhi, or solar parks in Rajasthan may be producing power for J&K etc.).Considering this, if India does not upgrade T&D infrastructure at an equal pace with power generation, a scenario may arise where generated power cannot be consumed. This would indeed be a disaster That’s why pure play T&D companies like Bajel will cater to a huge market.

3.GOVERNMENT BACKED
The Govt’s ambitious target to produce 500 GW of Renewable Energy (RE) by 2030, India’s T&D Infrastructure needs an urgent upgrade to support this goal

4.PROMOTER DRIVEN
Bajel is set to benefit massively from its powerful parentage with both Bajaj Electricals and Bajaj Finance Limited

Strong Support from Bajaj Electricals: Bajel can expect contracts and business support, boosting revenue and profits

Financial Backing from Bajaj Finance: Bajel will avail various financing facilities from Bajaj Finance, including working capital loans and bill discounting, ensuring smooth operations and financial stability

• Being part of the Bajaj Group gives it credibility, and can help it win large contracts from Govt. agencies for municipality work etc.

5. BUSINESS MODEL
The company’s business model revolves around delivering turnkey projects encompassing the design, engineering, testing, manufacturing, and execution of high-voltage transmission lines, substations, and underground cabling systems.They have over 20 years of experience in this sector and offer customized solutions to meet the specific needs of their clients.

They also engage in international projects, such as electrification efforts in Africa, and supply distribution poles to various countries.The company’s financial performance is driven by the successful completion of these projects, adherence to project schedules, and effective management of costs and resources

6.ORDER BOOK
The Company’s current order book stands at ₹4,000+ Crores as of 2024 and the order execution cycle is of 18-24 months, which gives a great revenue visibility to the company. It is well-positioned for sustained growth and value creation, driven by its strategic focus on core segments, expansion into new product areas, commitment to renewable energy, and international expansion.

7.FINANCIAL PERFORMANCE

GROWTH DRIVERS
Rising Energy Demand:
Both globally and domestically, the demand for electricity is rising, driven by economic growth, urbanization, and increased electrification across various sectors
Infrastructure Development:
The need for robust and reliable transmission and distribution infrastructure to support the growing energy demand and the integration of renewable energy sources is a critical growth driver
Projects like the Green Energy Corridor and international transmission line projects highlight this focus​
Policy Support:
Government policies and reforms aimed at enhancing grid reliability, promoting renewable energy, and facilitating open access to the transmission network are significant enablers of growth in the T&D sector

NEGATIVES
Modest Profitability: Despite operational improvements, profitability remains a concern due to intense competition and cost management challenges

Working Capital Intensity: High working capital requirements due to long project cycles and significant receivables

Bajel Projects Limited (BPL) operates in a highly competitive Power Transmission and Distribution (T&D) sector characterized by low entry barriers, leading to intense competition

Historically, the company has faced challenges with cost overruns and operational inefficiencies that have impacted its profitability

POSITIVES
Bajel Projects Ltd is poised for sustained growth with a robust order book of ₹4,000+ Crores, promising revenue visibility over the next 18 - 24 months

The company’s strategic focus on T&D, coupled with expansion into new sectors, positions it well for long-term value creation

Co. has strengthened its international presence in Africa. It’s now targeting new markets in the Middle East, Europe, and South America which will help it mitigate risk and expand global footprint

Being part of the Bajaj Group gives it credibility, and can help it win large contracts from Govt. agencies for municipality work etc.

Company’s financials look optically bad because it has just begun generating profits on a standalone basis for 3 quarters. Companies going from loss making to profit making however, provide investors the best opportunity.

Screener link:
(Bajel Projects Ltd share price | About Bajel Projects | Key Insights - Screener)
Website link:
(https://bajelprojects.com/)
Annual report:
(https://www.bseindia.com/xml-data/corpfiling/AttachHis/8bb88e6c-04a6-4607-9d69-58189c812232.pdf)

Disclaimer: Invested and biased

[shailiaf]

Very good analysis sir, can u please throw light on what were the objectives of demerger of Bajaj electricals limited and bajel project limited. Have demerger achieved these objectives? Please give your expert opinion. Thanks

[Abhijay]

Thank you so much for the feedback sir!
As you know, demergers often unlock value and allow the newly independent entity to pursue growth more aggressively in its focused sector.
Bajel Projects Limited was initially part of Bajaj Electricals Limited, a diversified company known for its consumer products and EPC services
In early 2022, Bajaj Electricals announced a strategic decision to demerge its EPC business into a separate entity to unlock value and provide focused growth opportunities.

After demerger
As an independent entity, Bajel Projects Limited has honed its strategic focus on the T&D sector, leveraging over two decades of expertise in executing large-scale EPC projects

The company has a robust order book and has secured several high-value projects, including a ₹358.43 crore transmission line project with Power Grid Corporation of India

international electrification projects in countries such as Togo

Their entry into other sectors is particularly exciting. The management’s forward-looking strategy includes expansion into renewable energy and other high-demand areas. This isn’t just a play on their current financials but a calculated bet on future growth opportunities.
Bajel Projects Limited has won its first data center order worth ₹100 crore for designing and building a 220KV GIS Substation and transmission line extension in Navi Mumbai.

[Sanjay_Kumar_E]

What is the source for the FY27 target slide? Please share the document.

[shailiaf]

Thanks sir for valuable insights. Regards

[Abhijay]

That slide is from this presentation:
(https://www.bajajelectricals.com/media/7670/presentation-by-management-of-bpl.pdf)

For the latest investor presentation you can check my first post.

[Mukesh_Poonia]

3-4 queries:-

1. Can they do 2.5k revenue this year(considering 3k order pipeline)and 40-50% YOY revenue growth possible h?
2. OPM improvement to 4-5% maintained kr skte h?
3. What should be approx NPM for next 2-3 yrs? Can they do 2% npm.
4. At current mcap of 3k cr, is it over valued for now? Or this PE will subsidize and forward pe is really low.
5. PLI scheme in transmission sector, how much they will benefit

Disclosure: not invested. looking for investing in transmission sector, hence studying.

[Rajandeep_Singh]

Bajel won this new order. Does anyone have any rough calculation of how much this order will be worth?

[RohitCifty]

The December order of Solapur transmission looks like an order of close to INR 200 Cr. The company baggged this order from Torrent Power. In the concall of Torrent power, they have estimated a project cost of INR 470 Cr for Solapur project which includes 90 Kms 400 KV transmission lines.

As per the above press release, though the kms awarded to Bajel in not mentioned, but it can be assumed the entire 90 Kms KV lines along with 400/220 KV Power station will be set up by Bajel.
Assuming INR 1.5 to 2 rupees per Km for 400 KV lines, it can be said that this contract is easily above INR 200 Cr for Bajel.

Further, the contract it won yesterday from Adani Energy for 400 KVs spanning across 217 Kms is easlly more than INR 400 Cr even though the amount is not disclosed.
Bajel Projects.pdf (297.7 KB)

In less than 30 days, their order book has gone up by more than INR 600 Cr.
The only thing I am not getting enough comfort over is why the margins are so low for Bajel and what are the sustainable margins in this space. I feel management should do a concall to give us a better understanding

Disc: Invested with tracking quanity

[Satyendra_Kumar]

Bajel Projects Ltd on LinkedIn: #bajelprojects #monopole #powertransmission...

Is this the new order or is part of previous orders?

[RohitCifty]

It is the part of the same order from Adani Energy Solutions…as mentioned in the post as well.

[Gautam_Chopra]

Powergrid EPC contract for Transmission line

[RohitCifty]

Estimated value of this Transmission line would be more than Rs. 400 Cr considering around Rs. 4 crore per km for a 765kV Tranmission line.

Hence Bajel has now added more than Rs. 1000 Cr to its order book in last 2 months with total order book on the upwards of Rs. 4000 Cr and current market cap of 2,500 Cr.

[23_Investments]

How does the stock look after the correction at a ₹2,000 crore market cap with a ₹4,000 crore order book?

Also, DIIs increasing their stake in the December quarter indicates confidence. With a business in transmission lines, this company seems well-placed for growth, benefiting directly from the expansion of renewable energy, apart from its other business segments.

Regular Order inflow which the management is sharing

[Amit_Agarwal1]

After demerging from Bajaj Electricals,the company is trying to stand on its feet independently. They have put up a booth in the recently conculded “Elecrama 2025”. The booth was prominently positioned and the display was top notch.Photographs attached.

[Abhijay]

Company Wins ₹400+ Crore EPC Order from Power Grid Corporation of India Ltd (PGCIL) via SPV – MEL Power Transmission Ltd to be completed in 29 months

Almost 800-900cr addition in 3-4 months to the strong backlog of orders

Low OPM is still a huge challenge managing the operational and execution cost will be vital.

[BuyRightSitTight]

The other big challenge is the strained cash flow position and long WC cycle. With the new orders it might get more challenging to manage cash flows.