Buy Bajaj Consumer, target price Rs 200: ICICI Securities

ICICI Securities has a buy rating on Bajaj Consumer Care with a target price of Rs 200. The brokerage likes the new CEO, Jaideep Nandi’s focus on execution (emphasis on implementation, looking at proof of concept and course correction requirement) given the demand slowdown and Bajaj Consumer’s ongoing cluster-based approach (Bain-advised). The company’s share price moved down by -4.88% from its previous close of Rs 138.25. The last traded stock price is Rs 131.50. Incorporated in 2006, Bajaj Consumer Care Ltd is a midcap company with a market cap of Rs 2047.78 crore.

Investment Rationale

I-Sec has modelled revenue / EBITDA / PAT CAGR of 6% / 3% / 5% over FY2020-22E. The brokerage has maintained a buy with the DCF-based target price remaining unchanged at Rs 200. At this target price, the stock will trade at 12 times P/E Mar’22E. Key downside risk is over-reliance on a single brand – the Bajaj Almond Drops Hair Oil.


Financials

For the quarter ended December 31, 2019, the company has reported consolidated sales of Rs 212.58 crore, down -3.43 % from last quarter sales of Rs 220.13 crore and down -5.53 % from last year same quarter sales of Rs 225.04 crore. The company reported net profit after tax of Rs 48.74 crore in the latest quarter.