Buy Bajaj Consumer Care; target of Rs 215: Sharekhan

Sharekhan's research report on Bajaj Consumer Care

Bajaj Consumer Care Ltd’s (BCC’s) Q4FY2023 beat ours as well as the street’s expectation with standalone revenues growing by 11.5% y-o-y to Rs. 245 crore (led by ~10% volume growth); OPM at 17.2% (improved by 283 bps q-o-q) and PAT grew by 7% y-o-y to Rs. 41 crore. New product launches grew by 2.1x in FY2023 to Rs. 113 crore; their contribution will go up to 30% from 12% in 4-5 years. It will support overall revenue growth and profitability in long run. Hair oil category volumes are likely to grow by 3-5% in FY24; Almond Drop Hair Oil (ADHO) volumes would beat category growth. The management targets double-digit revenue growth with OPM at 17-20% in FY24.

Outlook

Stock trades at 14.2x/12.1x its FY2024E/25E earnings. With expected double-digit earnings growth in the next two years and attractive valuation, we upgrade our rating to Buy with a revised price target of Rs. 215.