BCCL’s Q1FY21 results were ahead of our estimate. Revenue was better than our estimate due to inventory filling post lockdown and addition of sanitizer portfolio. ADHO volume fell 23.5% YoY. During Q1FY21, overall revenues declined by 18% YoY led by 18% /22% de-growth in general trade/MT respectively. GM contracted by 330bps primarily due to lower sales of premium ADHO (~23.5% decline) and higher sales of Amla oil. We believe that the ADHO sales would continue to remain under pressure until revival in economy. Going ahead, we believe that the BCCL’s volumes and margins would remain under pressure due to anticipated down trading. Though Q1FY21 results were ahead of our anticipation, we have maintained our FY21E and FY22E EPS estimates to factor in extended lock down in select states and lower secondary sales in ADHO.
OutlookWe do not see significant recovery in premium hair oil category in near term. We value the stock at 12x FY22E EPS and maintain a TP of Rs 160. Downgrade to SELL.
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