Bajaj Electricals Limited (NSE: BAJAJELEC) Q3 2025 Earnings Call dated Feb. 04, 2025
Corporate Participants:
Shekhar Bajaj — Chairman
EC Prasad — Chief Financial Officer
Vishal Chadha — Chief Operating Officer, Consumer Products
Rajesh Naik — Chief Operating Officer, Lighting Solutions
Analysts:
Yash Jain — Analyst
Natasha Jain — Analyst
Anirudh Joshi — Analyst
Rahul Gajare — Analyst
Achal Lohade — Analyst
Unidentified Participant
Prasheel Gandhi — Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to the Bajaj Electricals Q3 FY ’24-’25 Earnings Conference Call hosted by Ambit Capital Private Limited. [Operator Instructions] Please note that this conference is being recorded.
I now hand the conference over to Mr. Yash Jain from Ambit Capital Private Limited. Thank you, and over to you, sir.
Yash Jain — Analyst
Thank you, Tanuja. Hi, good evening, everyone. On — on behalf of Ambit Capital, I welcome you all to Q3 FY ’24 earnings call of Bajaj Electrical Limited. From the management side, today we have Mr. Shekhar Bajaj, the Chairman; Mr. E.C. Prasad, CFO; Mr. Vishal Chadha, Chief Operating Officer for Consumer Products; and Mr. Rajesh, the Chief Operating Officer of Lighting Solutions. Thank you, and over to you, sir.
Shekhar Bajaj — Chairman
Thank you. This is Shekhar Bajaj here. Good evening, ladies and gentlemen. Thank you for attending our Q3 earnings call and wish you all a very Happy New Year. We have delivered a good set of results for this quarter, owing to good festivals demand. On the macro front, while the headline CPI inflation eased to 5.2% in December ’24, it remains above the RBI’s target range. Due to a depreciating rupee, the Central Bank is likely to maintain a tight monetary stance. I believe the interest rates will continue to remain elevated for a few months, potentially curbing private consumption and investment. Consumers’ preference is moving towards premium and feature-rich products. I would like to assure you that Budget Electrical is working hard, this call will be recorded. I would like to assure you that Bajaj Electrical is working hard to commercialize its premium offerings. We saw signs of positive traction in Q3, and I’m sure we will have more success to report in succeeding quarters. Coming to financial updates, we delivered a good quarter. The company has achieved revenue from operations of INR1,290 crores as against INR128 crores, a growth of 5% over the third quarter of the previous year. For the quarter, the company made profit before-tax and profit-after-tax of INR45 crores and INR33 crores, respectively, against profit before-tax and profit-after-tax of INR50 crores and INR37 crores, respectively in the corresponding quarter of the previous year. It should be noted, however, that in December 2023 quarter, we had one-time impact towards warranty provisions of INR23 crores and income tax refund interest income of INR36 crores. Hence on a like-to-like basis, profit before-tax of December 23 quarter is INR37 crores, against which we have delivered INR45 crores for this quarter, which translates into a growth of around 21%. Consumer Product business has shown momentum by delivering a revenue growth of 8.5% on a year-to-year basis, mainly due to good festival demand in the month of October 2024. We have crossed INR1,000 crore revenue threshold for consumer products after two years and are very encouraged by this achievement. The Lighting Solutions business revenue contracted by 7.5% due to price erosion. We have launched our Build to shine campaign for our vertical in this quarter and have invested around INR11 crores, that is around 4.3% of the Lighting Solutions business revenue towards brand-building. I now hand it over to the CFO for detailed financial and operational highlights. Thank you.
EC Prasad — Chief Financial Officer
Good evening, ladies and gentlemen. This is Prasad. Thank you for attending our Q3 earnings call and wish you all a very Happy New Year. Coming to the overall performance, at the outside, let me reiterate that we had a very good set of numbers owing to a good festive demand. We delivered a strong profit before-tax of INR45 crores as against INR50 crores on a Y-on-Y basis. However, like Chairman explained, we had a one-time impact towards warranty provision true-up of INR23 crores and income tax referring interest income of INR36 crores in the corresponding quarter of the previous year. Hence on a like-to-like basis, the profit before-tax of December ’23 quarter is INR37 crores, against which we have delivered INR45 crores in this quarter, which translates into a growth of around 21%. Coming to the Consumer products, the Consumer Products business registered a strong revenue growth of 8.5% on the back of a good festive demand and trade business revival. Appliances, which had shown slower-growth in the previous quarters have grown strongly by high-single-digits. Within appliances, the domestic appliances have shown strong growth owing to categories like coolers and heaters, which showed high double-digit growth. Kitchen appliances continue to remain under stress even at the industry level, but with the demand uptick, we are hopeful of better performance in the coming quarters. Morphe Richels continue to register high double-digit growth. Probably this is the five straight quarters that Richels has been registering a double-digit growth. Fans remained flattish. Our CP EBIT margins are at 5% as against 1.7% in the corresponding quarter of the previous year. While the margins have increased 3x, it is necessary to know that quarter of the previous year had a one-time warranty provision of INR21 crores, which translates to around 2.2%. Hence on a like-to-like basis, we still have delivered a 5% EBIT margin vis-a-vis 3.9% in the corresponding quarter. The increase in margins are predominantly due to an increase in gross margins of 2%, which has been offset by our continuous investments in R&D and various other projects for improving our operational efficiencies. The brand investments were at 3%. Our transformation journey to address our product portfolio gaps, including premiumization of our portfolio is underway and is showing good traction. We continue to improve our logistics and manufacturing efficiencies by a few basis-points. How we have glad to share that we have regained market shares in certain appliance categories on a Q-on-Q basis. Over the next few quarters, our focus will be to increase the top-line and improve the market shares while continuing to spend heavily on the brand and other initiatives like revamp GTM, VAV, digitization — digitization, manufacturing efficiencies, et-cetera. Coming to lighting solutions, the lighting solutions business degrew by 7.5% due to continued price erosion during the quarter, which also had an impact on the operating leverage. However, our — however, under our revamp GTM initiative, we have identified 167 focus markets, which registered double-digit volume growth and mid-single-digit value growth. We have also observed pan-India volume growth in our focus categories like ceiling lights and batons. Our EBIT was at 2.1% as against 8.4% reported during the corresponding quarter of the previous year. Again, here it is necessary to know that we have invested in build-to-shine campaign and have invested around INR11 crores in brand-building activity, which translates to around 4.3%. Hence, on a like-to-like basis, our EBIT margins are at 6.4% vis-a-vis 8.4% of the previous quarter of the corresponding year. However, on a Q-on-Q basis, we have held our EBIT margins after crossing up the brand investments. The brand investments for this vertical will continue to be high for the next few quarters in our endeavor to increase our market shares. Coming to professional lighting, the order book stays healthy at INR231 crores and we are committed to growing this business. Coming to balance sheet and financial matrices, the balance sheet of the company continued to remain very healthy and strong. All the balance sheet ratios continue to be at optimal level. We continue to generate positive cash-flow from operations. This quarter, we generated about INR83 crores of positive cash from operations and we ended-up the quarter with a surplus funds of INR423 crores. That’s all from my side, and I’ll hand it over to you now and for taking the questions.
Questions and Answers:
Operator
Thank you very much. [Operator Instructions] The first question is from the line of Natasha Jain from PhilipCapital. Please go-ahead.
Natasha Jain
Yeah. Thank you for the opportunity, sir. My first question is on the consumer Products side. Firstly, congratulations on a good set of numbers. Sir, third quarter was a seasonal quarter for domestic appliances and Murphy Richards as well. So I understand the double-digit growth here, which is appreciated. Now coming to fourth quarter, we’ve observed that on-the-ground, there is demand moderation across consumer goods. So given 4Q will be a bigger play for fans and for Bajaj, fans is a comparatively lower revenue contributor. So how does 4Q look like to you? Are you seeing demand softness across electricals? Thank you.
Vishal Chadha
Hi, this is Vishal here. Our endeavor will be to do better than last year in the same quarter and that’s what we are hopeful for.
Natasha Jain
Got it. And sir, which category products have you taken price hike for can you quantify it if possible?
Vishal Chadha
We have taken price hikes across almost all categories, be it mixers, be it water heaters in — especially in two channels or irons, whether it is MF national format retail or is in e-commerce. So across categories, not just one.
Natasha Jain
Got it. And sir, my next question is on the ad spend. So you mentioned that in lighting, you have spent INR11 crores and your EBIT stands at INR5 crores. So can you just tell us what this huge ad spend was on in terms of lighting? Where did we spend this precisely?
Rajesh Naik
So mostly this is Rajesh here, the — most of that was on the ATL. We created the first film after almost two years, we went to-market line in terms of investing into the brand and that was mostly 80s.
Natasha Jain
So what would be the percentage of — I mean ad spend as a percentage of total revenue in 3Q…
EC Prasad
It’s 4.3% for lighting business.
Natasha Jain
For lighting and overall, sir, anything apart from this.
EC Prasad
Overall is 3.3% of Russia. So CPE ad spend is 3%, Lighting solution is 4.3% and overall 3.3%.
Natasha Jain
And we’ll maintain this run-rate going-forward also?
EC Prasad
Yes, as I mentioned, so we’ll be continuing to spend heavily on our brand in our endeavor to get back the market shares.
Natasha Jain
Got it. And sir, just one last question, if I may. So given that summer season is coming, now can you just talk a little about scaling up of your next portfolio as to what products can we see coming into the markets which weren’t there earlier? Thank you, sir.
Vishal Chadha
So mix coolers are the ones which we will be bringing into the market, but the ramp-up will be gradual fans as you already know are already-existing. So it will continue to remain a premium offering from our organization.
Natasha Jain
Got it. Thank you so much, sir and all the very best.
Shekhar Bajaj
Thank you, Natasha.
Operator
Thank you. The next question is from the line of Aniruddha Joshi from ICICI Securities. Please go-ahead.
Anirudh Joshi
Yeah. Thanks for the opportunity. Sir, you have indicated in the presentation regarding MFI impact in lighting. So just more seeking more clarity on MFI overall, what is the overall contribution and at the overall company-level also and what was the impact if you can quantify it or share more qualitative details on that. Also, is MFI impact still continuing or do you see probably the peak of the impact is already seen.
EC Prasad
So, Aniruddha, E.C Prasad here. So MFI used to contribute about 5-odd percent in our total offerings. And MFI has been impacted since RBI came down heavily on the MFIs and that issue still continues. So two areas of concern for us are the MFIs and the government channel, which has actually underperformed during this quarter. We hope that the government channels will start picking-up, but MFIs will still continue to struggle for some more time.
Anirudh Joshi
Okay. And means two-quarter also, we can continue to see some impact on MFI channels also.
EC Prasad
MFI is, yes. But the government channels probably will pick-up.
Anirudh Joshi
Government channel means CSD types…
EC Prasad
Okay. Yes. CSD and CPC. There again for the various reasons, the demand was low, but I think in the quarter, we see a demand coming back from those channels.
Anirudh Joshi
Okay. And the 5%, 5.5% you said is of the total sales number, correct?
EC Prasad
Okay. On the total sales number, yes.
Anirudh Joshi
Okay, sure. Understood. Second on lighting, we still seeing the price erosion continues to be there, means, what will be a — in a way the end game here means, do you still see the prices continuing to get eroded or even now or is there any, in a way full stop to that or how should we think about this business then? That is one question.
Rajesh Naik
Price erosion has been done in few categories in consumer products. I think one of the categories which is it, it has to still hit. So I feel that next one or two quarters it will continue for the price erosion. And it can come into the professional lighting also in some time. I think price game is not completely over. Until the BOV technology is completely set across product categories, it will continue to have price erosion for the next few quarters.
Anirudh Joshi
So price erosion is not yet over in our consumer products also and it is yet to begin in commercial products means B2B elimination products.
Rajesh Naik
I think it will be less because there is more of performance-driven, but yes, it will have some impact of privation in professional.
Anirudh Joshi
Okay. Surely, sir. Understood. And sir, third question in terms of — now we have seen consumer products doing well. So you — you mentioned about some of the focus market or change in GTM strategy also. So if you can elaborate a bit more on this change in GTM strategy, distribution expansion or like that? That is the last question from my side. Thank you.
Rajesh Naik
So this particular — this is Rajesh again because whatever we discuss about focus market for more of consumer lighting initiatives where we wanted to have the faster growth and that’s where we launched projects with the and we started with first pilot of five towns. And after success, we saw the success there in high double-digit growth. We expanded that to 67 markets. And there we are saying we are continuing to see high double-digit growth in volumes and single-digit growth in value as well. So that is at 165, we will be expanding that in next two quarters to the all-Indian level.
EC Prasad
So, we asked what is what is this initiative about? It’s about focusing on the WD, that is the weighted distribution rather than the numerical reach to be on the relevant counters, you know, doing the BTL activities properly, all of that stuff in those focus markets, which has actually started yielding results for us.
Anirudh Joshi
Okay. Sure, sure. This is very helpful. Thank you.
Shekhar Bajaj
Thank you. Thanks, Aniruddha.
Operator
Thank you. The next question is from the line of Rahul Gajare from Haitong Securities. Please go-ahead.
Rahul Gajare
Yeah, hi. Good evening, gentlemen, and thanks for the opportunity. You know, I — some of the questions asked earlier were helpful. So I have some other questions around new products. Can you throw some light on the product gaps which are there both on consumer and lighting given that there is a focus on premium products at this point in time?
Vishal Chadha
So from a consumer products point-of-view, we feel that some of the product gaps which we are hoping to address in the coming quarters are primarily around the area of fans. Other than that in the remaining categories, we obviously keep looking at white spaces which I can’t comment too much about at the moment but from a high-level for the big categories, fans will be our focus to fill the gaps.
Rajesh Naik
Talking about consumer lighting to be specific, because professional it is like back-to-back when we do the customization of the products for the specific regional. But consumer lighting, we had gaps earlier almost three, four — last three, four quarters, we were able to bridge all the gaps which were there as compared to the competition. And as we wanted to grow much faster in ceiling lights, we are focusing on bringing more-and-more new products into that particular category.
Rahul Gajare
Okay. So product development on the lighting side, especially on the consumer side is behind us now. We can say that.
Rajesh Naik
Yes, almost 27 products were launched in-quarter three, only in the same category.
Rahul Gajare
Okay. Now in the PPD, you’ve talked about double-digit growth in mRNL. Any specific product that you would like to call-out in terms of exceptionally strong growth that you see?
Rajesh Naik
Sorry, what we…
Shekhar Bajaj
Could you please repeat?
Rahul Gajare
Yeah. Any specific product that you would like to call-out in terms of growth? You already highlighted, I think that you had double-digit growth in MOPI, but besides that, is that — or is that the highest-growth that you’ve seen in the third quarter?
Vishal Chadha
Yeah. No, we have got segments within Morphy, which are growing faster than the overall growth, obviously. And those include the segments like coffee makers, food processors and so the personal care segments, so these are some of the segments which are growing faster and doing well for us.
Rahul Gajare
And how much would Morphy be in the first-nine months in terms of revenue?
EC Prasad
Yeah, it’s around 7.5% to 8%.
Rahul Gajare
7.5% to 8% of the total CP business?
EC Prasad
Yes of the Consumer business. Yes, Consumer, of course. In this particular quarter hello.
Rahul Gajare
In this particular quarter? Hello?
EC Prasad
Yes, Rahul.
Rahul Gajare
Yeah, So firstly, congratulations. We’ve seen margin uptick in the business specifically on the consumer coming closer to 5%. I want to know from here, what are going to be the key levers for margin expansion. Now this — the backdrop of this is we’ve probably reached about, 30% 31% gross margin, which is probably best-in the last 10, 15 years. So which are the areas which essentially will drive a margin expansion from this level. Thank you very much.
EC Prasad
So Rahul, we’re doing a lot of things. One is the VAV exercise that we are doing is expected to realize about 3%, 4% margins, some of which might get passed on to the market, but there is a potential lying there. Second is, as I mentioned even in the last call, we have still a lot to do as far as the operating leverage is concerned, because we have created a structure to deliver about INR6,000 crores plus of revenue, which we have not yet reached. So as we reach that milestone, the operating leverage will kick-in and we will have about 2%, 3% coming from there. Two other areas that we are focusing on is on the manufacturing and the logistics cost. There again, there are a lot of improvements possible, which we are you know so logistics, we are aiming to get down the logistics cost by one percentage point and manufacturing also by a percentage point.
Rahul Gajare
Okay. Thank you very much and all the very best.
EC Prasad
Yeah. Thank you.
Operator
Thank you. The next question is from the line of Achal Lohade from Nuvama Wealth Institutional Equity. Please go ahead.
Achal Lohade
Yeah. Good evening. Thank you for the opportunity, sir. Can you help us understand this quarter is seasonally the best quarter in terms of the product mix, if I understand correctly, given the water heater is a high-margin water heat — room heaters, etc. So first of all, you know, how do we see — so you’ve explained to the drivers for the margin improvement, but if I were to ask you in terms of ballpark range, can we move to 7%, 8% kind of a margin in next two years? Do you think that is revalent or does that assume a reasonably good healthy demand or even with the current lackluster demand, you can still aim for that kind of a margin?
EC Prasad
So I think some of the VAV benefits will start coming in the next year. So we can expect that about 2% to 3% to kick-in. Operating leverage, obviously depends on the volume and the demand. So if both of them start kicking-in together, probably we’ll be reaching a 7% sort of a margin.
Achal Lohade
By FY ’27, have I understood right, sir?
EC Prasad
Yeah. Two years.
Achal Lohade
Okay. The second is, yeah.
Shekhar Bajaj
Once again, I’m Shekhar Bajaj here.
Achal Lohade
Yes, sir.
Shekhar Bajaj
Just as a side, I’m mentioning that luckily, Michel has come from not our industry. And also we have a sales head also not from our industry. So they don’t have the mindset problem and therefore, we can easily improve our margin by 1% or 2%.
Achal Lohade
Understood. Second is in terms of the premium mix, if you could just give us a sense of in the consumer products and the lighting, what is the mix right now? What was it, let’s say, three years ago? And how do you see it over next three years? Some sense, some direction, some quantification, if you could?
Rajesh Naik
In our case, in the consumer lighting space, we were not in-line with industry in terms of mix. We were more driven in the land segment because our distribution was large and we were reaching to most of the counters and the land category was contributing to almost 50% to 60%. And our ceiling was ceiling category, which is supposed to be premium in this particular consumer lighting segment was at low-single digit. Now in last two, 3/4, we have improved back to almost 17% 18% and we are continuing that journey to bring it to the level of 25% to 30% contribution coming from ceiling light. And even in terms of batters, we are trying to bring more innovative products in terms of inverter batterns and even the high voltage battles, which will take that to the premium category and where the price will be much lower. So we are working on adding feature plus products in all the categories, including lamps where we had inverter as a category and we were the first to launch high-voltage inverter lamps into that category. So we are building on premium in all the three categories where we are having the focus product segment approach.
Achal Lohade
And how about consumer products?
Vishal Chadha
In consumer products, as far as mixes are concerned, we are close to 40% of our premium offering and it will — we hope to continue to strengthen it in the 750 watts and above space. In case of water heaters, we are between 20% to 25% and the fans at a Y2D level for premium as well as DLDC, we are close to around — between 20% and 25% also. So which we will hope to keep increasing as we go-forward?
Achal Lohade
Understood. And in terms of the logistic cost, we’ve been hearing for some time in terms of the changes, right? So where are we on in that journey? You know, you’ve kind of hinted in a passing remark with respect to operating leverage and the logistic cost-savings. But I recall the previous target used to be fairly steep 200 basis-point to 300 basis-point improvement. Is that still intact or you think that was — that is now not possible anymore?
EC Prasad
That is intact. We have actually reduced our logistics cost over the last nine months or so by about 100 percentage point and there is still a scope of about one more percentage.
Achal Lohade
Yes. Okay. Can you give us some sense what is the cost now in terms of logistic cost?
EC Prasad
Okay. So the benchmark that we are targeting is about 5%.
Achal Lohade
Okay.
Shekhar Bajaj
So that 5% will take another couple of years according to me, at this moment, I think we are around 6.2%, 6.3%, which I think we should be positioned to bring it down, but it will take a couple of years now, every 0.1% reduction takes its own effort, but that’s our objective. Sheet.
Achal Lohade
Yes, sir. And just a comment in terms of the — you know, the replacement of — of the CEO position, where are we — how soon can we expect? Is there anything? Any update on that?
Shekhar Bajaj
Do you have a problem with me around?
Achal Lohade
No, not at all, sir. It that we were earlier having some. Yeah.
Shekhar Bajaj
I was CMD for many years.
Achal Lohade
Of course.
Shekhar Bajaj
I became temporary. Now in fact CMD I’m just joking. No, we’ve got already — we are working on that. Hopefully soon we will have a MD around. But till then I’m very much now — my wife is much happier to see me away-from-home. Otherwise she was getting tired of me. So I’m fully involved now, so there’s no problem.
Achal Lohade
Okay, sir. Thank you so much and wish you all the best, sir.
Operator
Thank you. [Operator Instructions] The next question is from the line of Nattasha Jain from PhillipCapital. Please go ahead.
Natasha Jain
Yeah. Thank you for the follow-up, sir. Just one data if I may have missed. Can you please call-out the mix between professional lighting and consumer lighting?
EC Prasad
60-40%. 60% professional and 40% of consumer lighting.
Natasha Jain
Got it. And you mentioned that in professional lighting also, we can see slight bit of erosion going-forward, right?
Shekhar Bajaj
Yeah.
Natasha Jain
Got it.
Rajesh Naik
It is there as of now also, but it was happened in the consumer lighting. Pain professional because it is given through specifications, it is little, it will continue to have some.
Natasha Jain
Got it. Thank you so much, sir. That’s all. All the very best.
Rajesh Naik
Thank you.
Operator
Thank you. [Operator Instructions] The next question is from the line of Achal Lohade from Nuvama Institutional Equities. Please go ahead.
Achal Lohade
Yeah. Thank you for the follow-up, sir. If you could give some broad sense in terms of the demand situation. Sorry, I missed the initial part if you’ve already commented, you could repay in terms of urban, rural and specific category-specific comments, if you could. Like what we heard is, in this quarter, the delayed winter seems to have had some impact on-the-water heaters. Has that the case with been with us as well, et cetera.
Vishal Chadha
So, we remain cautiously optimistic about the next quarter. So during the previous quarter — this Q3, we have done pretty well as far as the heaters and the coolers, etc., are concerned. Even the room — the water heaters we have registered our growth in-spite of the delayed winter. And we expect the domestic appliances to do pretty well. Our kitchen appliances, we feel will remain muted for some more time because this discretionary spend has still not kicked-in. And I think with the stimulus given by our finance minister, probably in the next two, 3/4, things could start looking up. But having said that, the inflationary pressure still continues to be pretty high. The interest-rate still continues to be high and we don’t see that cooling in the next one or two quarters. So that will have an impact on the demand. But I think the cooling — the seasonal products should do well in Q4 and the Q1 for next year.
Achal Lohade
Understood. And is it fair to say that we are more indexed to urban than rural or if there is any understanding?
Vishal Chadha
So we are actually more indexed towards rural. But having said that, with the launch of all these new products, we are also addressing a lot of urban markets now, which you were not addressing earlier. So that also helps in a way.
Achal Lohade
Understood. And if you could comment on the market shares, any ballpark range in terms of various categories? I know it’s hard to give out, but still, you know, a broad sense.
EC Prasad
We don’t give that out on the call, but…
Achal Lohade
Let’s say, even for FY ’24, if I were to ask for?
EC Prasad
Some of the categories over Q2.
Rajesh Naik
See, one other problem in-place. One of the problems that we have is that there is no proper system by which the market shares are known officially. Unofficially, we can find out and keep having our guesses, but there is no body by which we can be sure like automobile and scooters and two-wheelers and all have their market-share, which is exact because it is something which is monitored in unfortunately in small appliances and all, there is nothing like agency or organization which keeps. Therefore everybody can keep saying we’ve got high market-share, but we don’t know really. That’s why we don’t want to make that statement. Thank you.
Achal Lohade
Got it, sir. Thank you. Thank you.
Operator
Thank you. The next question is from the line of Yash Jain from Ambit Capital. Please go-ahead.
Yash Jain
Yeah. Hi, sir. Just a small question. Any guidance on capex or what we are planning to do here.
EC Prasad
So capex will continue to be in the same range.
Yash Jain
That will be any number, sir.
EC Prasad
So it should be in the range of INR100 crores INR150 odd crores for the next year.
Yash Jain
Okay. Okay. Thanks, sir.
Operator
Thank you. The next question is from the line of Veeral from Oakland. Please go ahead.
Unidentified Participant
Hi, thank you for taking my question.
Operator
Sir, we are unable to hear you clearly.
Unidentified Participant
Am I audible now?
Operator
Yes, please ahead.
Unidentified Participant
Yeah. Thank you for taking my question. Sir, relatively new to tracking this company. So just wanted to understand in terms of lighting solutions, what are the factors that is driving this price erosion? And in your experience in terms of looking — working in this industry for so long, what are those factors that could stop or restrict this kind of price erosion?
Rajesh Naik
Yeah. So this is Rajesh. The price erosion was mainly because of the high volumes which are coming in, as you know in electronic industry has the volumes go up, the prices comes down because the production. Second is the technology change itself. It was earlier driver technology, which has now gone to driver on good technology with which almost 50% 90% price reduction in the same futures as possible. And that continues from one particular product category when it gets implemented two different categories. And that was only reason why the price reduction continued for last two — almost two years. And now it may also go in promotion lighting if that particular technology stabilizes for industrial environment?
Unidentified Participant
Okay. So how could we stop — I mean, what measures could be taken to stop this kind of price erosion if any.
Rajesh Naik
So in my view, this particular price erosion will get stopped once it stabilizes across all product categories because there is no new technology as of now insight in terms of in next one or two years, which can again destabilize the pace of this implementation.
Unidentified Participant
Okay. Thank you. Thanks a lot.
Operator
Thank you. The next question is from the line of Rahul Gajare from Haitong Securities. Please go ahead.
Rahul Gajare
Yeah, thanks for the follow-up. I just had one question. You talked about price hike being taken across categories. Is it possible you can quantify it in the consumer on a broad segment level at consumer level and the lighting level.
EC Prasad
Is about 2% to 4% across categories.
Rahul Gajare
In consumer, right? Okay.
EC Prasad
Yes, in consumer, yeah.
Rahul Gajare
Okay. Thank you very much.
Operator
Thank you. The next question is from the line of Prasheel Gandhi from Anand Rathi. Please go ahead. Prasheel Gandhi, please go ahead with a question, your line is unmuted.
Prasheel Gandhi
Yeah. Hello. Am I audible?
Operator
Yes, you are sir.
Prasheel Gandhi
Just wanted to double-check. You highlighted that you are targeting 7% EBITDA margins by FY ’27. Is that correct?
EC Prasad
Yes, that’s right. So internally, we are targeting much more, but this is — we are hopeful of reaching that in the next two years.
Shekhar Bajaj
See, let me clarify, Shekhar Bajaj here that the CFO is always very, very ambitious and very positive. We have to be a little careful. The markets are very tough. So that’s our objective. But what will happen only time will show. So don’t keep putting that every time in every meeting, you don’t say wage of 7%, so please don’t do that.
Prasheel Gandhi
Yeah. Sure, sir. Sir, secondly, on — could you just highlight the demand trends that have been in the January month? So could you give a bit more flavor to that?
Shekhar Bajaj
No, flavoring is only done after the quarter is over.
Prasheel Gandhi
Sure, sir. Thank you very much and wish you the very best.
Operator
Thank you. [Operator Instructions] The next question is from the line of Aniruddha Joshi from ICICI Securities. Please go ahead.
Anirudh Joshi
Yeah. Thanks for the opportunity again. Sir, now with MFI and CSD channels getting impacted, is company thinking about the new channels which are emerging like quick commerce, etc. So any strategy quick commerce that you can indicate? And secondly, what is the industry level sales in both ECD or consumer products as well as lighting, consumer lighting at MFI channel as well as the CSD channel or overall CPC plus CSD both put together channels, hello.
EC Prasad
Yeah, so government — so you wanted to know the industry or our share?
Anirudh Joshi
No, sir, industry level, what is the share of MFI and industry level share of…
EC Prasad
I’m not sure about the industry share, but going by our past, we are definitely stronger in those two channels. We had a significant share both in the government channel as well as the MFIs. Government channel for us contributes about 9 odd percent. And as I mentioned, about 4% to 5% in MFI and we were one of the strongest players there. And your second question is on the alternate channels. We e-commerce. E-commerce. So Q2, Q so we have the early-mover advantage in Q-commerce. We are already there in Q2. But as of now, it’s a very small share, but I think gradually it will pick up.
Anirudh Joshi
Okay. Okay. Sure, sir. Thanks.
EC Prasad
Thank you.
Operator
Thank you. [Operator Instructions] As there are no further questions from the participants, I now hand the conference over to the management for closing comments.
Shekhar Bajaj
Thank you. Thank you very much all of you who have participated. We are very, very positive about what’s happened in the third quarter and we are looking-forward that the fourth quarter should be strong, so that we end the year very strongly and we want your continuously support and best wishes because we are working very hard. We’ve got a very good team in-place and we are very, very positive. We started the month well and we are hoping that the quarter should be strong. Thank you.
Operator
[Operator Closing Remarks]