Sharekhan's research report on Bajaj Consumer Care
Q1FY2023 financials were mixed with revenue growing by 14.6% y-o-y to Rs. 247 crore (driven by a 14% rise in volumes), while a 980 bps y-o-y fall in OPM dragged down adj. PAT by 32% y-o-y to Rs. 33.4 crore. With new product launches the company is catering to ~83% of the overall hair oil market from mere 35% earlier. Market share remains at 10.3%. Bajaj Almond Drops hair contribution reduced to 86% from 93-94% earlier due to strong traction for new launches and Amla portfolio. Rural demand recovery will help the ADHO segment bounce back, while higher media spends would support new launches and key products, expansion on digital platform, widening distribution reach will drive growth in the medium term. Company eyes OPM of 20-21% in the medium term.
Stock has underperformed broader indices and trades at discounted valuations of 13.3x/11.3x its FY2023E/24E EPS. We maintain a Buy on the stock with a revised PT of Rs. 200.
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