Bajaj Electricals Ltd: Valuation Shifts Signal Price Attractiveness Concerns

Valuation Metrics Signal Elevated Pricing

As of 10 Feb 2026, Bajaj Electricals trades at a P/E ratio of 52.28, a significant premium relative to its historical valuation band and many peers in the sector. The price-to-book value stands at 2.73, further underscoring the stock’s expensive status. These multiples have shifted the company’s valuation grade from ‘fair’ to ‘expensive’ as per recent assessments.

Other valuation indicators reinforce this narrative. The enterprise value to EBITDA (EV/EBITDA) ratio is at 16.74, which, while not the highest in the sector, still suggests a stretched valuation given the company’s return metrics. The EV to EBIT ratio is elevated at 37.09, signalling that earnings before interest and taxes are being valued at a premium by the market.

Comparative Analysis with Peers

When compared with key competitors, Bajaj Electricals’ valuation appears less attractive. For instance, Metro Brands, classified as ‘Very Expensive’, trades at a P/E of 73.56 and an EV/EBITDA of 35.48, indicating even higher multiples but in a different market segment. V-Guard Industries, with a ‘Fair’ valuation grade, has a P/E of 49.62 and EV/EBITDA of 30.29, suggesting Bajaj Electricals is somewhat more reasonably priced than some peers but still expensive relative to its own history.

Other companies such as Bata India and Campus Activewear are tagged as ‘Attractive’ despite P/E ratios above 60, highlighting that valuation alone does not dictate attractiveness but must be weighed alongside growth prospects and profitability metrics.

Profitability and Return Ratios Lag Behind

Bajaj Electricals’ return on capital employed (ROCE) and return on equity (ROE) stand at 7.54% and 5.22% respectively, which are modest and raise concerns about the justification for its high valuation multiples. These returns are below what investors typically expect for a stock trading at over 50 times earnings, indicating a potential mismatch between price and underlying business performance.

The dividend yield is also relatively low at 0.74%, which may deter income-focused investors seeking yield in addition to capital appreciation.

Stock Price Performance and Market Context

Bajaj Electricals’ current market price is ₹408.95, down slightly from the previous close of ₹411.50, with a day’s trading range between ₹390.00 and ₹427.80. The stock has seen a 52-week high of ₹749.35 and a low of ₹383.25, indicating significant volatility and a downward trend over the past year.

Examining returns relative to the Sensex reveals a stark underperformance. Over the past year, Bajaj Electricals has declined by 43.77%, while the Sensex has gained 7.97%. Over three and five years, the stock has lost 65.33% and 61.05% respectively, whereas the Sensex has appreciated by 38.25% and 63.78% over the same periods. Even over a decade, while Bajaj Electricals has delivered a respectable 129.55% return, it lags the Sensex’s 249.97% gain substantially.

Implications for Investors

The combination of elevated valuation multiples, subdued profitability metrics, and poor relative price performance suggests that Bajaj Electricals currently offers limited price attractiveness. The stock’s Mojo Score of 20.0 and a downgrade in Mojo Grade from ‘Sell’ to ‘Strong Sell’ as of 22 Sep 2025 reflect this deteriorated outlook.

Investors should be cautious given the stretched P/E ratio of 52.28, which is well above the sector average and historical norms for the company. The modest ROCE and ROE figures do not support such a premium, raising concerns about the sustainability of earnings growth and the risk of valuation correction.

Sector and Peer Comparison Highlights

Within the Electronics & Appliances sector, Bajaj Electricals’ valuation is expensive but not the most extreme. Companies like Metro Brands and Relaxo Footwear trade at even higher multiples, though their business models and growth prospects differ. Conversely, firms such as Redtape and V-Guard Industries offer varying valuation and risk profiles, with some peers classified as ‘Attractive’ or ‘Very Attractive’ despite higher P/E ratios, indicating that investors value other factors such as growth potential and earnings quality.

Outlook and Strategic Considerations

Given the current valuation and performance metrics, Bajaj Electricals faces a challenging path to justify its premium pricing. Investors should closely monitor earnings growth, margin expansion, and return ratios in upcoming quarters to assess whether the company can improve its fundamentals to support the elevated multiples.

Furthermore, the stock’s underperformance relative to the broader market and peers suggests that investors may find more compelling opportunities elsewhere in the Electronics & Appliances sector or in other sectors with better risk-reward profiles.

In summary, while Bajaj Electricals remains a recognised name in the industry, its current valuation parameters and financial performance warrant a cautious stance. The downgrade to a ‘Strong Sell’ rating by MarketsMOJO reflects these concerns and signals that investors should consider portfolio rebalancing or alternative investments.

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