Sharekhan has given Buy recommendation for Bajaj Consumer Care with a target price of Rs. 355 in its research report issued on Apr 20, 2021

Sharekhan’s research report on Bajaj Consumer Care

Bajaj Consumer Care Limited (BCC) posted strong performance in Q4FY2021 with revenue growing by ~40% to Rs. 246crore,OPM expanded by 24.7%, and PAT grew by 120% to Rs. 53.9crore. April was a good month with the rural market performing well. However, management is cautious about the coming months. Gross margin pressure is likely to sustain in Q1FY2022 but will get stabilised in the quarters ahead (BCC took price hike of 2.5% and will curtail on cost). Improving penetration of Almond Drop Hair Oil (ADHO) brand, gaining market share in the amla category, adding profitable products in the portfolio, and distribution enhancement remain medium-term growth strategy. The company is focusingon improving OPM in upwards of 25% in the near term. We have reduced our earnings estimates by 3% for FY2022, while maintaining them for FY2023.

Outlook

The stock is trading at attractive valuations of 15.7x its FY2023E earnings. We maintain Buy witha revised PT of Rs. 355.

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