Buy Bajaj Corp, target Rs 429: Anand Rathi

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26 Aug, 2025 12:21

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Anand Rathi

Bajaj Corp is an Indian consumer goods company with major brands in hair care.

To drive growth, Bajaj Consumer Care continues to focus on launches and innovations (with two launches in Q4 FY19). The success, however, be seen in due course.

Improving volume growth. Q4 FY19 revenue grew 10.9 percent YoY to 2,457 m. Overall volume growth was 5.5 percent while ADHO reported 7.4 percent volume growth.

The gross margin contracted 100bps YoY to 66.3 percent.The price of LLP at 72/kg and that of refined oil at 91.6/kg for the quarter were respectively 10 percent and 7 percent YoY higher.

The EBITDA margin fell 79bps YoY to 31.6 percent. EBITDA grew 8.2 percent YoY to 777m. Adj. PAT rose 9.4 percent YoY to 606m, affected by higher other income and slightly lower depreciation expenses.

It continues to focus on launches, innovations to drive growth. During the quarter the company had two launches: Bajaj Cool Almond Drops, an extension of its ADHO portfolio, and Bajaj Nomarks Ayurvedic AntimarksSunscreen.

Factoring in the brand extensions, and assuming a steady rise in overall demand (rural and urban), we expect an 11.8 percent CAGR in revenue and 14 percent in earnings over FY19-21.

We largely retain our FY20 and FY21 estimates, lower other income, however, leading to a reduction in our target price of Rs 429 (Rs 445 earlier) based on 22x FY21e EPS. The stock trades at 16.3x FY21e P/E, a ~50 percent discount to peers. As it has slipped ~15 percent in the last couple of months, we upgrade our rating to a Buy, with 35 percent potential.

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