Dolat Capital recommended accumulate rating on Bajaj Consumer Care with a target price of Rs 359 in its research report dated July 16, 2019.
Dolat Capital's research report on Bajaj Consumer Care
The company’s topline rose 8.5% in Q1FY20, driven by a 4.6% volume growth. The volume performance was impacted due to stress in the CSD channel. Excluding CSD volume, the domestic business’s volume rose 3.5%. The strong volume growth in modern trade (+13%) and multifold growth in IB sales helped it mitigate the negative impact of CSD decline. The company was able to expand GM by taking price hikes in the quarter. However, operating margin shrunk, due to a rise in A&P spends. The ADHO brand continued to gain volume and value market share. Going ahead, we believe that the rural areas should benefit from stimulus.
However, new product launches may lead to a further rise in A&P spend. We maintain our FY20E and FY21E EPS at ` 16.5 and ` 17.9, respectively, as Q1FY20 results were in line with our estimate. We value the stock at 20x FY21E to arrive at a TP of ` 359. Maintain Accumulate.
For all recommendations report, click here
Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
The Great Diwali Discount!
Unlock 75% more savings this festive season. Get Moneycontrol Pro for a year for Rs 289 only.
Coupon code: DIWALI. Offer valid till 10th November, 2019 .