Buy Bajaj Consumer Care; target of Rs 300: ICICI Direct

ICICI Direct's research report on Bajaj Consumer Care

Bajaj Consumer (BaCo) continues to improve its growth trajectory with gradual recovery in in hair oil market (largely driven by urban markets). ADHO revenue growth of 9% YoY with broad based growth across SKUs is encouraging (with continued media investments). We like the continued improved performance in organised trade. Gross margins were largely stable. Operating profit margin expanded due to cost saving initiatives. We believe the building blocks of (1) expanding in popular hair categories of Amla and Coconut and (2) developing premium brand/products are steps in the right direction. We like its focus on investing in both brand building and distribution expansion. We believe improvement in macros and execution may drive multiple re-rating (see our report). Maintain BUY.

Outlook

Our earnings estimates are largely unchanged; modelling revenue / EBITDA / PAT CAGR of 10% / 24% / 22% over FY23-25E. Maintain BUY with DCF-based unchanged target price of Rs300. At our target price, the stock will trade at 21x P/E Mar’25E. Key downside risks are over-reliance on a single brand – ADHO and continuity in inflationary environment.