Markets have been moving in and around that 57,000 points mark for a while now. Select midcap stocks, which saw a spectacular rally last year have given up gains. Here are 2 midcap stocks that can be good picks for the long term and for their dividend yields.
Bajaj Consumer Care
Bajaj Consumer Care is a leading player in Light Hair Oil category with the flagship brand Bajaj Almond Drops Hair Oil commanding more than 60% market share in its category. The company has over the years diversified and today also produces apart from hair oils products like hair serum, hair conditioning mask, face cream, face soap, face scrub and sanitisers under various brands.
Bajaj Consumer Care also distributes its products in India and exports to over 30 countries, with primary focus in SAARC, Gulf & Middle East, ASEAN and African regions.
Bajaj Consumer Care: Digital sales to drive growth
The new product launches and aggressive selling through e commerce is likely to drive growth at the company. In fact, growth was at 45% for the quarter and 95% for 9M through ecommerce for the period ending Dec 31, 2021. We believe new products launches in various categories would fructify in the next few quarters and sales through ecommerce would also show robust growth. The company reported an EPS of Rs 9 for the nine month period ending Dec 31, 2021. It is likely to do an EPS of around Rs 12 or thereabouts for 2021-22.
Bajaj Consumer Care: Attractive on dividend yields
In 2022-23, despite cost pressures we believe the company can chalk out an EPS of Rs 14. If we apply a p/e of 20, the stock should trade at Rs 280 at least. Buy the stock at the current market price of Rs 170 for long-term gains.
Also, for the year ending March 2021 Bajaj Consumer Care declared an equity dividend of 1000.00% amounting to Rs 10 per share. At the current share price of Rs 170.55 this results in a dividend yield of 5.86%. This is not bad at all.
Gulf Oil Lubricants: Buy for long term
This is another stock that has fallen to very attractive levels. Gulf Oil Lubricants is a top player in the lubricants space. The company has a consistent track record of profitability and dividends. The company again is cheap on the valuations front.
For the quarter ending Dec 31, 2021, the company reported an EPS of Rs 11.63 and even for the Sept 2021 quarter the EPS was in the same range. Even if the company ends the year with an EPS of Rs 40, the stock is not expensive at a price of Rs 430. If we offer a reasonable discounting of even 15 times, the stock should trade at Rs 600.
Even buyback of shares in Gulf Oil were at Rs 600
The company recently offered a buyback of shares at Rs 600, which ended earlier this month. Even the dividend yield on the stock is pretty decent at 3.74%. We believe that there remains tremendous value in this midcap stock and hence it is a good stock to buy, due to low p/e and attractive dividend yields.