Bajaj Electricals delivered its worst quarterly performance in 18 quarters with a net loss of ₹34.10 crore in Q3 FY26, marking a sharp reversal from the net profit of ₹33.36 crore in Q3 FY25. According to latest reports, revenue from operations fell 18.5% to ₹1,048-1,051 crore from ₹1,287-1,290 crore in the previous year. The Consumer Products segment saw revenue decline 25.2% to ₹776.81 crore, while Lighting Solutions revenue grew 9% to ₹274.10 crore, though this was insufficient to offset the collapse in the core business segment.
The primary driver of revenue degrowth has been channel stock normalisation across all categories, as stated by the company management. During 2023-24, distributors and dealers heavily stocked up anticipating strong demand, but are now working down excess inventory before placing fresh orders. This inventory destocking cycle, which typically lasts 2-4 quarters, directly reduces revenue from fewer fresh orders and impacts margins through lower fixed cost absorption. The company faces structural underperformance with zero revenue growth over the past five years — a revenue CAGR of approximately -0.65% — significantly below peers like Havells (12-15% CAGR) and Crompton (10-12% CAGR).
Gross margin contraction occurred due to lower volume across high-margin categories, as fans and premium appliances typically carry higher margins than lighting. When these categories de-grow 25%, the product mix shifts toward lower-margin products, compressing overall gross margins. The company also faces rising competition from Havells, Orient Electric, Crompton, and Polycab in fans and appliances, all of which have invested more aggressively in premiumisation and marketing. An exceptional item of ₹28.89 crore related to new Labour Code implementation costs further compounded the loss, with HDFC Securities describing Q3 FY26 as posting '18-quarter-low margins'.
Adding to investor concerns, CFO EC Prasad resigned effective January 26, 2026, with his departure announced on October 31, 2025. The absence of a permanent CFO during Q3 FY26 when the company posted its worst results raised governance concerns among institutional investors. The company also faced GST demands of ₹67-80 lakh in March 2026, though these are manageable in quantum. Promoter holding stands at 62.7% while overall institutional interest remains low, with the stock trading at approximately 0.9x revenue near historically low valuations.
Despite the challenges, ICICI Direct maintains a long-term Buy rating with 12-month targets of ₹420-480, implying 23-40% upside from current levels near ₹342-354. However, delivery requires concrete evidence of channel recovery and margin normalisation. If Q4 FY26 and Q1 FY27 show channel inventory normalising and volume recovery in fans and appliances, earnings could recover sharply given the operating leverage in the business. The company is investing in product innovation including new premium fan ranges, energy-efficient appliances, and smart home products, while the wires segment could be a long-term growth driver if executed well. However, sustained double-digit growth may remain elusive without a strategic reset, as the company has not grown revenues in five years and lost market share to competitors.
