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Equirus Securities
Bajaj Consumer Care (Long)
CMP: ₹385.85
Target: ₹504
Bajaj Consumer Care Ltd, formerly Bajaj Corp is an India-based holding company. The company is engaged in the business activity of trading and manufacturing of cosmetics, toiletries and other personal care products. It is a fast-moving consumer goods (FMCG) company.
Bajaj Consumer Care (Bajaj Corp) ’s 3Q standalone revenues grew 10 per cent y-o-y to ₹230 crore, 4 per cent above EE. Volumes were up 7 per cent y-o-y, slightly above EE, led by healthy volume growth in restaged ADHO. Rural markets continue to drive overall growth for Bajaj Consumer as secondary sales improved sequentially and wholesale volumes picked up. Recent initiatives towards portfolio diversification are still at a nascent stage, and response to restaged Nomarks has been encouraging.
We raise our FY19/FY20 EBIDTA estimates by 1 per cent/2 per cent to factor in a slight improvement in gross margins due to declining raw material prices while broadly maintaining our revenue estimates. With rural recovery and benign input costs, the risk-reward seems favourable. Maintain Long with a March 2020 TP of ₹504 (versus ₹499 earlier) set at a 28x TTM EPS of ₹18.
Risks: Lower-than-expected demand and higher raw material costs.
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