This Is A Deeply Undervalued Stock; Buy The Stock As 2022 Could See An Upswing

Buy the stock of Bajaj Consumer Care

This company is a renowned player, particularly in the haircare space. It also has businesses like skin care, hygiene and an international business. The main stay of the business is products like Bajaj Almond Drops Hair Oil, which is the top brand in the hair oils business. Apart from this it has various other popular brands like Bajaj Amla Aloe Vera Hair Oil, Bajaj Brahmi Amla Hair Oil, Bajaj Cool Almond Drops etc. In skincare the products are under the Bajaj Nomarks Brand.

The company is now expanding rapidly and has launched a spate of new products, including 100% pure olive oil, castor oil and jajoba oil. The company is now pushing sales harder and e-commerce continues to scale up Q-o-Q with doubling of business over last year currently contributing to 4% of turnover. Strategic SKUs for the e-commerce channel (650ml ADHO, BAHO) have become lead contributors to sales and growth.

Dividend yield of 5.15% based on current market price

The company for the financial year ending March 2021 has declared a dividend of Rs 10 per share, translating into a dividend yields of 5.15% per share.

The stock price of Bajaj Consumer Care has dropped from levels of Rs 324 to the current market price of Rs 194 as quarterly numbers of the company were not impressive.

Financial performance and valuations of the Bajaj Consumer Care Stock

The company's performance for the second quarter ending Sept 30, 2021 was dismal, thanks to increase in raw material costs and state wise restrictions of curfew. The earnings per share of the company has fallen from more than Rs 6 in the previous quarter ending Sept 20, 2020 to Rs 3.2 in the Sept quarter ending 2021.

However, there are a few reasons to be optimistic on the company's numbers going forward. Revenues are expected to be better going forward thanks to the spate of launches at the company. Apart from this raw material prices have also seen a gradual decline. As marketing initiatives, especially on e-commerce websites playout, we could see financial performance improving a great deal. The stock is almost available at a 52-week low, which warrants another look at the stock. The company has a small equity capital and the promoter holdings is also pretty decent. We believe that the stock could do much better in the coming days and hence suggest a buy on the stock for long term holding. An EPS of Rs 17 or thereabouts is possible in 2022-23. If you accord a p/e of 15 times, the stock should be closer to Rs 260.

Disclaimer

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