Bajaj Consumer Care is one of the top players in the hair oil business. It has reputed brands like Bajaj Almond Drops Hair oil, Bajaj Brahmi Amla Hair Oil, Bajaj Amla Hair oil and Bajaj Jasmine Hair oil.
Bajaj Almond Drops Hair oil is among the top hair oil brands in the country and commands a very premium position. The company also owns Bajaj Nomarks Skin Care Range, and recently diversified into skin care.
The company also recently launched the Bajaj Cool Almond Drops, and has achieved a market share of 1.3 per cent in cooling oils in June 2019. The company has also launched Bajaj Nomarks Antimarks Ayurvedic Sunscreen launched in March 19 and expects to pick a greater market share in the coming quarters.
A sharp fall in shares make it attractive
Shares of Bajaj consumer have fallen in line with most other FMCG stocks. The shares have slipped from 52-week highs of Rs 468, to the current levels of Rs 253.
It is not as if the financial performance has been bad, but, the sentiments for FMCG stocks have also taken a hit on account of the economic slowdown. This has hit the stock of Bajaj Consumer Care as well.
Dividend yields of near 5.52 per cent
Bajaj Consumer Care declared a dividend of Rs 14 per share in Jan this year. Based on the same the dividend yield itself works to around 5.52 per cent.
If you see most FMCG stocks, they barely yield any decent dividend yields and hence this makes the stock attractive. We do not see the company reducing the dividends significantly, as the performance of the company has been rather good. Bajaj Consumer Care tends to declare dividends in the month of Jan, so if you buy now, you could get dividends in the next few months.
Cheap on valuations
The company did reasonably well for the first quarter ending June 30, 2019, wherein the net profits were placed at Rs 58.66 crores, as against Rs 53.77 crores in the corresponding period of the previous year.
The company reported an EPS of Rs 3.98 for the period ending June 30, 2019. Bajaj Consumer Care can end the year with an EPS of Rs 20 or thereabouts. If you consider a p/e of a very conservative 20 times, the stock should quote at Rs 400. This is an FMCG company, where price to earnings are almost always close to 30 times. A good stock to buy, which is also cheap from a valuations perspective.
With the newly launched products, there is a scope for Bajaj Consumer Care to enhance earnings even further. We expect the company to do well in the coming days and the stock with its dividend yield is very attractive. Buy the same for the long term.
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