Bajaj Electricals Limited (NSE: BAJAJELEC) Q3 2026 Earnings Call dated Feb. 09, 2026
Corporate Participants:
Unidentified Speaker
Manan Goyal
Sanjay Sachdeva — Managing Director & Chief Executive Officer
Vishal Chadha — Chief Operating Officer – Consumer Products
Shekhar Bajaj — Chairman
Rajesh Naik — Chief Executive Officer, Lighting Solutions
Analysts:
Unidentified Participant
Natasha Jain — Analyst
Manoj Gauri — Analyst
Praveen Sahai — Analyst
Rachana Kukreja — Analyst
Alok s — Analyst
Anuj Sehgal — Analyst
Presentation:
operator
Ladies and gentlemen, Good day and welcome To Bajaj Electrical’s Q3FY26 earnings conference call hosted by ICICI Securities. As a reminder, all participant lines will be in the listen only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing Star then zero on your touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Manan Goyal from ICICI Securities. Thank you. And over to you, Mr. Goyal.
Manan Goyal
Thank you. On behalf of ICIC securities, we welcome you all to Q3 and 9 month FY26 result conference call of Bajaj Electricals.
Manan Goyal
Ltd. Today we have with the senior.
Manan Goyal
Management represented by Mr. Shekhar Bajaj, Chairman Mr. Sanjay Sachdeva, M.D. and CEO Mr. Vishal Chatta, COO Consumer Products. Mr. Rajesh Nayak, COO Lightning Solutions and.
Manan Goyal
Mr. Suketu Shah, Finance Controller.
Manan Goyal
Now I hand over the call to the management for their initial comments on the quarterly performance. Then we will open the floor for Q and A session. Thank you.
Manan Goyal
And over to you, sir.
Shekhar Bajaj — Chairman
Thank you. Good evening ladies and gentlemen. I am Shekhar Bajaj. Thank you for attending the Q1 earnings call. We hope you had an opportunity to review our financial results earnings presentation which are available on the stock exchanges. From an industry and macroeconomic perspective, the period began with an encouraging festive momentum and reflected the underlying resilience of the domestic economy supported by steady GDP growth. And this is reflected in the performance in the Relating Solutions Vertical Lighting. Solutions Vertical delivered a strong performance achieving revenue growth of 9% representing a best in class revenue growth and margins.
While these macroeconomic factors were broadly supportive of industry demand, the company’s performance for consumer products during the period diverged from the broader market primarily due to internal actions around inventory normalization undertaking to address channel conditions. Consumer product witnessed a decline in revenue of 25% during the quarter. Primarily attributable to deliberate channel normalizations undertaken in response to elevated inventory levels across categories. This was a conscious and prudent action aimed to restoring channel health and ensuring alignment with the evolving demand environment rather than a reflection of any structural weaknesses in the underlying business. Importantly, these measures have strengthened the quality of our distribution, improved inventory visibility and positioned the company to participate more sustainably in demand recovery as market conditions normalize.
Before I hand it over to Sanjay Sardev, I would like to highlight that the fundamental strength of our business remains firmly intact. Our brands continue to enjoy strong consumer awareness. Our market shares across key categories have remained stable and our distribution reach remains deep. The actions undertaken during the quarter were tactical in nature and do not in any way dilute the long term competitiveness of positioning of our portfolio. I now hand it over to Sanjay for detailed business and financial highlights. Thank you.
Sanjay Sachdeva — Managing Director & Chief Executive Officer
Thank you Chairman Sir Good evening ladies and gentlemen and thank you for joining our investor call. As Chairman said, we have delivered mixed performance for this quarter so let me start with Lighting Solutions. We have remained open and proactive in expanding our presence within the Lighting Solutions vertical through adjacent and complementary categories. As part of this strategy, we initially entered the switchgear segment in Q2, followed by the announcement of our foray into Solar Solutions in Q3 and more recently the launch of Wires this month. These initiatives are aligned with our objective of building an integrated portfolio, leverage brand strength, distribution reach and execution capability to drive long term sustainable growth.
This vertical has consistently delivered revenue growth and margins against the H1 revenue growth of 6%. We have accelerated our growth to 9% this quarter owing to higher mix towards focus categories like ceiling and outdoor lights which has also helped achieve ebit of close to 7% versus last year of 2%. This is quite encouraging for us and we are confident to continue the momentum in the upcoming quarters. Now let me talk about consumer products. We have embarked on a journey of cultural and structural change in the way we engage with the channel to move to a more balanced approach between demand led sell through and a volume led push to embed this approach.
It is important to have healthy channel inventory. Over the past few quarters in the investor calls we have highlighted elevated channel inventory levels as a key operating concern. As a result of this transition and the corrective actions taken, channel inventory levels are on a path of normalization. There are still certain pockets, especially the summer related products where the channel inventory remains high and we look forward to its normalization as season picks up. This structural shift to secondary offtake led execution will strengthen our channel health, improve revenue predictability, improve margin quality, enhance working capital working capital efficiency and flushes out high cost incremental sale practices and position the company and IT positions the company for sustainable demand led growth.
This has started reflecting in stabilization of market shares across all key categories. The EBIT margins were negative owing to operating deleverage. I would now like to highlight certain operational parameters that have begun to show early signs of improvement. While the benefits of these initiatives are not immediately visible and will accrue over time, they form a critical part of our broader effort to streamline and strengthen our operations logistics which has been a persistent area of focus for the past two years is now being addressed. With increased rigor, we have initiated a comprehensive review across key drivers including overall inventory levels, space optimization and elimination of high cost incremental sales practices.
Several corrective actions have already been implemented and we believe we are moving in the right direction and post normalization tangible benefits are expected to be visible in our results. A part of this is already getting reflected in this quarter’s cash flow from operations where we have generated operating cash flow of 211crores and ended the period with a cash and cash equivalents balance of 620crores. This strong equity position provide us with adequate financial flexibility to deploy growth capital judiciously while maintaining balance between strength and capital discipline. In parallel, we are undertaking a detailed review of other variable cost elements such as product demonstration, customer service expenses and trade schemes with a clear focus on improving cost efficiency and margin quality.
Additionally, fixed costs which has expanded over last few years are now under tighter control. Capital expenditure and innovation investments are also being evaluated more stringently to ensure that growth capital is deployed judiciously and deliver superior returns on investment. With this I would like to open the call for questions. Thank you.
Questions and Answers:
operator
Thank you. We will now begin the question and answer session. Anyone who wishes to ask a question may press Star and one on the Touchstone telephone. If you wish to remove yourself from the question queue, you may press Star and two Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question comes from the line of Natasha Jain with Philip Capital. Please go ahead.
Natasha Jain
Yeah, thank you for the opportunity. So my first question is on the consumer products portfolio. The top line growth as well as margin. The decline has been very severe now that all your peers set numbers are out. Everybody has. Even if top line has been modest margin improvement has come through because of winter products and they are high margin and Bajaj is any which way one of the better players when it comes to say geezers or room heaters etc. So wanted to know why such a sharp decline.
Unidentified Speaker
So Natasha, one of the things Vishal will answer in more detail. One of the things when we are flushing out stocks so while we are not selling to our distributors but we are running promotions on that stock to move to trade. So part of that will get reflected in the margin drop. So keep that in mind and that is one of the drivers of the margin drop. But this is temporary so underlying margin will be healthier than what you are seeing and you will see that improving as we move forward.
Vishal Chadha
Yeah, and Natasha, on a like it’s been said that we have taken corrections as far as the inventories are concerned. However, in terms of the secondaries in trade, for example, we have improved our actually market share and our growth has been flattish as far as water heaters are concerned. In instead for example, we have a single high digit growth. So the tertiary offtake which happened, which are reflective of the market share clearly indicate that we continue to maintain our strength in this space.
Natasha Jain
Understood. Sir, can you just deep dive a little bit as to what are these steps that you’ve taken in terms of inventory normalization and how can what kind of benefit or other when will this benefit accrue in the numbers?
Vishal Chadha
So the inventory normalization has taken across our trade channel and also in our aggregators which service the E commerce channel. We are on that journey as was stated in the opening remarks. We expect the normalization process to continue in a quarter or so. We should be in a healthy place.
Natasha Jain
Understood. So my second question is on the wires division. So broadly can you tell us the strategy here as to will it be completely outsourced and what are the estimates that we can build in for Bajaj say in the medium term both in terms of top line contribution from this as well as margins and will you be selling this from your existing FMEG channel itself?
Rajesh Naik
Yeah, this is Rajesh here. So strategy as of now is that we introduce consideration the strength of our distribution which is there in the market and as the channel overlap is there, we feel that it is completely logical to enter into this particular space which is growing much faster. And in that we are the strategy on manufacturing or outsourcing as of now we are exploring that what is the most beneficial way and we are just enter into that and looking at the current traction we feel the outlook will be good. As of now we don’t want to project in terms of numbers or revenues which are coming out of that looking at the forward numbers.
Natasha Jain
Got it. So just one related, one related question on that. In terms of buyers, there are a lot of incumbents right now and some of them in fact larger peers are losing market share in this segment. And on top of that the commodity volatility is also extremely high. Just want to know, I mean I understand TAM expansion is one of the strategy here and we can leverage reach, but is that the only moat here in this business? What would lead a dealer to switch from say a Polycab or a Havels to a Bajaj?
Rajesh Naik
So again brand strength which is there and as you are aware and the quality what we are going to offer which comes along with the brand, the trust which is created on that basis. We are in this particular business which is the legacy of brand research.
Natasha Jain
And then you say quality sir, you. You are outsourcing it completely, right?
Rajesh Naik
Yeah. But it’s definitely the product which is not complete, it is not off the shelf product. We do add in terms of what we are looking for from that particular product before we enter into the category.
Natasha Jain
Understood sir. Thank you so much and all the very best.
operator
Thank you. A reminder to all the participants that you may press star and one to ask a question. Next question comes from the line of Manoj Gauri with Equinus Capital. Please go ahead.
Manoj Gauri
Yeah, thanks for the opportunity. So I just want to understand the thought process behind this channel correction. What made us took this decision, why we took this decision. So first if we can answer that.
Unidentified Speaker
If.
Unidentified Speaker
Look back at the year so far we have seen that the summer season did not pan out as per the expectations. And owing to that the channel was carrying a significant amount of inventory. Now if you look at our business and contribution of summer’s products which is relatively volatile, products like coolers and TPW etc. Our business is almost 20, 25% contribution typically comes from in a normal year comes from these businesses which in this year was at, you know, approximately half of it. And therefore the channel had been carrying the inventory. Secondly, the second summer which typically comes later also did not pan out.
And this was impacting both the health of the channel as well as their ability to stock up for relatively faster moving products. So we as has been said earlier also thought it is prudent and judicious to take this correction rather than loading the inventory into the channel more and more. And we expect as it normalizes in the coming days it will actually be more beneficial for the business and our channel partners.
Manoj Gauri
So one thing is if you look at we just commented like we have gained market share. So ideally our position in the channel should have been better versus peer. Peer have reported relatively better set of numbers on the top line side. Third, if you look at an air cooler company which have which has reported their numbers, they have reported by and large flattish kind of number and their sole business is air coolers. So on one side we are talking about market share gains but on the other side we are saying like our channel inventory was higher as compared to peer.
That is that the right interpretation? And then if it that’s the case then probably our Q1 Q2 numbers, probably the correction that we took in Q3 that should actually should have been more visible in Q1 and Q2 if we would have maintained that normalized levels of inventory.
Unidentified Speaker
So like I said, the levels of inventory remained elevated and the assumption was it would go down first in due to the summers did not pan out and then after that, which was quarter three which was about the festive period. We thought it’s the right time to normalize this as we move into the next financial year. Now as far as competition is concerned, I really can’t comment on that. But for us, for example, coolers are down by almost 38 to 40% versus our sales last year. So we have been impacted as far as the seasonality is concerned.
Manoj Gauri
Right? Sir, one last question if I may. If I look at the Q3 performance and somewhere the channel would have normalized in terms of inventory levels then in this case I presume like other brands would be having higher inventories in the channel as of now. In this case, is it not the. Is this understanding correct that their market share probably in the coming months and quarters might be at risk because even your retailers and dealers would be. In fact they would like to liquidate other brands inventory first and then probably go for primary billing.
Unidentified Speaker
Market shares are reflected by the tertiary offtakes which happen off the shelf. And as has been said in the opening remarks, it’s about changing the principles of doing business. It’s not about stuffing the channel but it’s about giving the optimal level of inventory and an approach which drives market share and consumer pull. So I think the hypothesis that the more you fill in the inventory into the channel that translates into a higher market share is not necessarily something which we.
Manoj Gauri
So sir, somewhere should we expect a normalized performance from fourth quarter onwards or it will take some time still probably it should be more visible during FY27.
Unidentified Speaker
It would be more visible during FY27. As we said earlier, we are in the path of normalization in pockets. There are still some additional corrections which we need to take and therefore by FY27 should start seeing positive results.
Manoj Gauri
Sure sir, thanks for this and wish you all the best.
operator
Thank you. A reminder to all the participants that you may press star and want to ask a question. Next question comes from the line of Praveen Sahai with Prabhu Das Capital. Please go on.
Praveen Sahai
Yeah, thank you for opportunity. My first question is or a clarification is related to the. As you had mentioned in the, you know, opening remark that the summer product they still have A higher inventory. Is it what you have said? Let’s just clarification.
Unidentified Speaker
It is lower than what it was in the beginning of the quarter. And we said that it’s in the process of normalization and it would take probably one more quarter for it to completely normalize. Also we think is that because of the bad season, the channel partners are also being cautious in loading, you know, taking stocks at a very, very high level. So it’s a mixture of both. So the stock correction is taking in two ways.
Unidentified Speaker
One way is the ones which are high and are not seasonal. That correction is. We are. We are seeing the secondary is much higher than what we are selling to the trade. Other correction way of doing correction is the summer products where the usual loading which happens in partly in quarter three and partly in quarter four will be more cautiously loading it because we want the stocks to be flushed out which is already sitting in the channel. So that is another way of correcting the stock in the channel.
Praveen Sahai
Got it sir. Second question is related to the commodity inflation. So is there any price hike expected from, you know, the bajaj or you had taken to, you know, mitigate commodity inflation so far?
Unidentified Speaker
Yes, we took. We have already announced a price increase ranging from 2 to 5% from with effect from 1st of February.
Praveen Sahai
And how much of the commodity inflation is expected to cover with this?
Unidentified Speaker
We expect to cover bulk of the commodity inflation with this price increase. Plus at the same time we continue to do activities around VA V value engineering and validation. And as and when we feel it’s the right moment, we might decide to pass on some of that benefits to the consumer also. But as of now the commodity impact we have utilized it by and large.
Praveen Sahai
Okay, next question is related to the, you know, the some time back you had announced for the switchgear. So how is the, you know, the so far traction from that segment?
Rajesh Naik
So when this is Rajesh again when we launched we had a good response from the trade who are current partners as well. And that time we were working on creating a stock and the stock took little more time. So secondary has started since last month and the feedback from the market in terms of quality and other parameters is much encouraging and we are looking forward for the higher numbers coming through coming quarters.
Praveen Sahai
So now you have a three vertical switchgear, solar solution and the wire. Any target the company has said for the next couple of years where to reach.
Rajesh Naik
So these are all big categories and that is where we are trying to test the water and try to see how we can get our share rightful share in this particular segments, as of now, we are working on three years plan. We will not be able to reveal numbers till finalize that with the board.
Praveen Sahai
Okay, thank you sir and all the best.
operator
Thank you. A reminder to all the participants that you may press star and one to ask a question. Once again, a reminder to all the participants that you may press star and one to ask a question. The next question comes from the line of Rachana Kukreja with simple. Please go back.
Rachana Kukreja
Hi, thanks for the opportunity. This might be a repeat question. Now. The BE transition happening in 2026, you know, how are the channel distributors reacting this time? Because a similar trans happened during 2023 and that time the industry saw higher inventory levels at the distributor end which took some time to normalize. And are distributors now willing to stop or is there any caution and do you see any risk of excess inventory related to prolonged winter in the distributor channel for fans?
Unidentified Speaker
So like I mentioned during the last call also, we are in a. We have in a better position to navigate this change this time. And because firstly there was already a slightly elevated level of inventory with our partners, we navigated that change well and did not feel the need to put in more stocks as far as fans were concerned. So it’s a normal process of channel inventory normalization which we have already talked about earlier. And so far there has been as and when the season progresses, we have also mitigated the cost impact. Commodity impact is different, but from a design, et cetera point of view, we have mitigated that impact, like I said earlier from a VAV point of view.
So going forward, we remain cautiously optimistic that there would not be any resistance from the channel partners or distributors in stocking up. Of course, it is dependent on how the season pans out and how the summers pan out.
Rachana Kukreja
Okay, so what, what are the ground level at the channel inventory? How are their sentiments currently? If you could, you know, give some color on that as well?
Unidentified Speaker
I’m sorry, could you please repeat the question?
Rachana Kukreja
Just more on the be regulation transition part, how are they reacting to it? If you could give some color on that.
Unidentified Speaker
Wait, it’s a. It’s a regulation. So as far as the partners are concerned, at least on ground, I don’t see any massive resistance or problems around it because it is now the second time which is happening. So people are used to this ratcheting happening over a period of time.
Rachana Kukreja
Okay, thank you.
operator
Thank you. A reminder to all the participants that you may press star and one to ask a question. Next question comes from the line of Alok s with 361asset management. Please go ahead.
Alok s
Yeah, hi. Just two questions. Firstly, you know, this initiative that you’ve taken, it’s, it’s, you know, maybe it’s a good cleanup and hygiene. Is there, is there? Now should we think like a board approved process where you know, inventory in the trade beyond a particular duration would be considered to be like, you know, kind of, kind of flushed out this way or this would be a one off event. How should we think?
Unidentified Speaker
Sure, there is no board approval or inventory flush out though. This was discussed in the previous board meeting but it was no, there’s no board approval per se. If you can talk more about exactly what the question is.
Alok s
Yeah, no, I was just trying to. No, I was just trying to think through that, you know, how in detail. Also there are some, you know, inventory kind of processes in terms of liquidation etc, which at times are board approved with respect to, you know, beyond a particular timeline, you. You account for the inventory in particular method. So I was just trying to gauge that, you know, from either shrinkage or write off or just trying to not push more inventory or is it just one time cleanup. How we should think two things. I’m thinking maybe it’s, you know, the earlier, earlier inventory levels in the trade would be high and you know, we decided before this, before the season, we kind of prune it to an optimal level so that the next primary sales for Bajaj becomes much more smoother, cleaner and ROIs for the trade should improve going ahead.
Was that the thought process, you know, when we took off, initiated this process of kind of reducing the primary.
Unidentified Speaker
Yeah. So if you are trying to draw parallel with retail industry, for example, it’s apples to oranges because here we are flushing out our inventory. It is about channel hygiene and the channel partners inventory as far as we obviously have our own process of looking at whether slow movers etc. Which are not. It’s a very small part of our overall business and those are the normal practices which we follow as and when we want to liquidate those. But that’s business as usual. It is not something what we were alluding to over here. It is not our inventory which is an issue.
It is the inventory with the channel partners in the channel hygiene which we were more focused on.
Alok s
Got it. And sure, sure, this is helpful. And can you, can you kind of elaborate? So then you know, what were the outstanding or elevated levels in terms of days or categories, you know, which I. Which had, which had kind of bulged up in the trade. What has it come down now to and what is like a normal hygiene level as a process going ahead you would want to maintain any such maybe quantification would be helpful. Yeah, that’s it from my side.
Unidentified Participant
So. Hi Sukey, this side. So if I have to elaborate from the number of days we just want to give you a fact that in consumer products it is down by 30% in terms of number of days. So that’s one bit of it. Now how much inventory we want to carry in the channel. At the same time what’s the healthy is the dynamic number that keeps on changing. This is the scenario, environment and the seasonal factors. So while there is no return, some rule around it. But we are very cautious in the way we want to culturally operate with the channel.
Unidentified Speaker
Okay, yeah, sure. Thank you.
operator
Thank you. A reminder to all the participants that you may press star and one to ask a question. Next question comes on the line of Anuj Sehgal Manas Capital. Please go ahead.
Anuj Sehgal
Yeah, hi, thank you. This question is for Mr. Bajaj. Mr. Bajaj, over the last several years, you know, you had also embarked upon the Range Reach expansion program where the focus was on a pull based system and it was followed for some years and then from our understanding it was abundant. Are we going back to that same philosophy of going back to a pull based model and sort of. My question is why did we abandon that model and why are we going back to the same model again? That is one. And secondly, if you look at the business over the last almost more than 10 years, the business has not delivered on its potential both on the top line and on the margin.
Especially on the margin. So how should we think about the consumer products business, let’s say over the next five years in terms of what it can achieve both from a top line and bottom line perspective? If Mr. Sagdeva could pitch in, that would be help.
Unidentified Speaker
Thank you very much. See, I’ll tell you that the RREP which was introduced was an outstanding thing which we had done and we had improved our distribution very well. But one thing which we found was that because of that distribution it was coming out to be a problem that we were covering all the outlets around 2 lakh outlets. We had covered the cost, was not working out. So now we are doing RREP but in a different way. We are doing it by also having direct dealers. We are also doing a distribution which is like rrep.
We don’t call it RREP but the distribution by which we are covering outlets to now. Like for example, if somewhere there’s a 10 lakh sale per year and there’s somewhere it’s only 10,000 sales per year or 1 lakh. Earlier we were going to every outlet. A 10 lakh outlet also will be visited every week and a 1 lakh will be also visited every week. Now we are going to do a channel depending on the demand and the possibility we will increase the movement and visit to that place where There is a 10 lakhs business and relatively less visit to those which is 1 lakh business.
So therefore that is where the change will take place compared to what is being done earlier. But RRP as a procedure was good. And just now what you’ve been hearing which is what we’ve done in the last one starting from last quarter is that please concentrate on secondary rather than primary. And therefore because of that secondary sale though we have shown a negative 25% negative growth in case of consumer product as was mentioned the market share has not gone down much because actually we have reduced our inventory level. We have reduced the inventory level. Our dealers as was mentioned by Suketu has been reduced by almost 30%.
So therefore because of which their margins will improve because you know if you keep inventory which you don’t need you are ending up paying carrying cost, go down cost and all that. So we have reduced our inventory to that extent. Our go down requirement has gone down, our total carrying cost has gone down. That’s why our cash flow has improved by 210 crore because we have been able to free our cash which was you know, dead either in inventory or in outstanding. So that is where also at the month end we don’t like this type of pressure which comes in because we want to achieve our top line.
So top line is only a transfer from our stock to our distributor stock which we don’t want. We want a secondary sale and therefore the whole emphasis in secondary sales. That is why this correction which is taking place and normalization which is taking place will result in long term margin improvement for dealers. Our cost of carrying will come down and it will be a win win for all. Does that answer your question?
Anuj Sehgal
No. Yes it ANSWERS the question Mr. Bajaj. But I only hope that this also leads to sustainable growth and improvement in the profitability of the business. As you know the margins in the consumer product business have been low single digits and they have been stuck there for a while. So either the cost structure of the business needs to be reviewed or we need to have sustainable growth for the business to absorb the higher cost base and it doesn’t. So I don’t know what is being done on that front to achieve sustainable profitability. At least in line with your peers.
Unidentified Speaker
You see that happening. The improvement you see starting with the fourth quarter. But next year should be showing a substantial improvement because all those corrective action which you are talking about by being doing that, doing that, your cost is coming down and therefore your margin obviously improve. My inventory carrying cost goes down, might go down. Already given up lot of our number of outlets through whom we are selling, keeping inventories being reduced. All those areas are being done because we realize what you are saying is correct, that cost has to be kept under control because margins cannot keep improving by improving selling prices.
The margins will only improve by reducing your cost. And that’s what our objective is. So you’ll see things happening in this quarter also and coming in the next quarter.
Anuj Sehgal
Okay, thank you very much.
Unidentified Speaker
Welcome.
operator
Thank you. A reminder to all the participants that you may press star and one to ask a question. Once again, reminder to all the participants that you may press Star and one to ask a question. Once again, a reminder to all the participants that you may press Star and one to ask a question. Thank you. Ladies and gentlemen. As there are no further questions, we have reached the end of question and answer session. I would now like to hand the conference over to the management for closing comments.
Shekhar Bajaj
Thank you very much all of you who have joined this conference and the questions and answers which have been had. So we’d like to wish you all the best and let’s hope the next few quarters you will see some improved results. Thank you very much. Shekhar Bajaj here saying goodbye to you.
operator
Thank you on behalf of ICICI Securities. That concludes this conference. Thank you for joining us. You may now disconnect your lines.