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1 Bajaj Corp Ltd
FMCG – Personal Care Bajaj Corp Ltd Buy On a firm footing, geared up to leap…
CMP Rs 480 Target Price Rs 579
Key Data
Face Value (Re) 5.00 Market Cap (Rs in mn) 14160 Total O/s Shares in (in mn) 29.5 Free Float 15.3% 52 Week High / Low 812 / 367 Avg. Monthly Volume (BSE) 10357 Avg. Monthly Volume (NSE) 25893 BSE Code 533229 NSE Code BAJAJCORP Bloomberg Code BJCOR IN Beta 0.75 Date of Incorporation Apr 2006 Last Dividend Declared * Six month return -34.5% Indices BSE500 FCCB’s outstanding N.A. Warrants outstanding N.A.
(* Pre IPO, company distributed Rs 9200 mn as dividend)
One Year Price Chart
0
100
200
300
400
500
600
700
800
Aug-10 Sep-10 Nov-10 Dec-10 Feb-11 Mar-110
500000
1000000
1500000
2000000
2500000
3000000
3500000
4000000
Closing Price Volumes
Source: Capitaline
Share Holding Pattern 31st Dec 2010
Banks/MF's/Institutions/Ins6.2%
Public & Others2.4%
FII's3.2%
Non Promoters (Body Corporate)
3.5%
Promoters 84.8%
Source: Company, KJMC Research
Chintan Modi Phone-022 4094 5500 Ext. 128 Email - [email protected]
Bajaj Corp Ltd. is a well established player in the hair oil segment and enjoys leadership position in the Light hair oil category through its flagship brand Bajaj Almond drops hair oil. The company recently raised Rs 2970 mn through IPO which shall be deployed for promotion of planned product launches and acquisitions. We expect revenue to grow at CAGR of 15.7% over FY10‐FY13E and PAT to grow at CAGR of 11.8% over FY10‐13E.
Key Highlights Bajaj Almond Drops Hair Oil – Key brand in the portfolio: Leader in its segment, the product dominates with over 52% market share in the Rs 7.5 bn Light Hair Oil segment. This single brand contributes approximately 95% to the total topline and has exhibited valuebased CAGR of 39% over FY07 to FY10. Premium positioning and customer loyalty has helped the product to command higher price in the market, which in turn has aided in earning high margins. Going ahead, we believe Bajaj Almond Drops as a brand will be instrumental in launching the planned future products.
Right mix available to successfully launch future products while acquisition is on the horizon: The Company plans to launch 4 new products in the personal care segment to leverage its vast distribution network and to capitalise upon its existing brand equity. It possesses sufficient cash to meet its objective and has an experienced management team to devise an efficient strategy for a successful launch of new products. The management is also looking around for acquisition of a strong regional brand which it can place on a national platform.
Trend towards ‘Premiumization’: Increasing urbanization along with improvement in per capita disposable income has accelerated the trend towards buying premium products. Coupled with ‘Premiumization’, retail expansion (particularly large format stores) will drive demand for consumption of premium products. We believe Bajaj Corp Ltd with its offering in hair oils is well positioned to benefit from this favourable change.
Negative working capital & margins sustainable in future: The Company runs on negative working capital cycle because of its policy of selling on cash. We expect the company to maintain the margins for FY12E & FY13E in the range of 25 – 26% at EBITDA level. Rising prices of LLP which forms major part of raw material is a challenge, but we believe Bajaj Corp would be able to pass on the cost pressure by price hikes as it exhibited in the past without affecting the market share. On account of nil debt, PAT margins are likely stabilise at 23% for FY12E & FY13E.
Financial Snapshot Rs in mn
Particulars FY09 FY10 FY11E FY12E FY13E Net Revenue 2444.2 3299.9 3762.5 4362.5 5105.3 Growth % - 35.0% 14.0% 15.9% 17.0% EBITDA 516.2 973.9 1090.0 1105.1 1322.8 EBITDA Margin % 21.1% 29.5% 29.0% 25.3% 25.9% Adj PAT 469.8 839.1 952.1 1001.9 1173.3 Adj PAT Margin % 19.2% 25.4% 25.3% 23.0% 23.0% Adj EPS 47.0 33.6 33.3 34.0 39.8 Adj P/E 10.2 14.3 14.4 14.1 12.1 ROE 91.0% 211.0% 39.3% 24.3% 24.4%
Source: Company, KJMC Research
30th March, 2011 Initiating Coverage
2 Bajaj Corp Ltd
Disclaimer / Important disclosures KJMC CAPITAL MARKET SERVIES LIMITED is a full service, stock broking company, and is a member of BSE (Bombay Stock Exchange Ltd., and NSE (National Stock Exchange of India Ltd., KJMC group and its officers, directors, and employees, including the analyst(s), and others involved in the preparation or issuance of this material and their dependants, may on the date of this report or from, time to time have “long” or “short” positions in, act as principal in , and buy or sell the securities or derivatives thereof of companies mentioned herein. Or sales people, dealers, traders and other professionals may provide oral or written market commentary or trading strategies to our clients that reflect opinions that are contrary to the opinion expressed herein. KJMC group may have earlier issued or may issue in future reports on the companies covered herein with recommendations/information inconsistent or different from those made in this report. In reviewing this document, you should be aware that any or all of the foregoing, among other things, might give rise to potential conflicts of interest. KJMC group may rely on information barriers, such as “Chinese Walls” to control the flow of information contained in one or more areas with in KJMC group into other areas, units, groups or affiliates of KJMC Group.KJMC group and its associates may in past, present or future have investment banking/advisory relationship with companie(s) mentioned herein. The projections and forecasts described in this report were based upon a number of estimates and assumptions and are inherently subject to significant uncertainties and contingencies. Projections and forecasts are necessarily speculative in nature, and it can be expected that one or more of the estimates on which the projections and forecasts were based will not materialize or will vary significantly from actual results, and such variances will likely increase over time. All projections and forecasts described in this report have been prepared solely by the analyst of this report independently of the KJMC Group. These projections and forecasts were not prepared with a view toward compliance with published guidelines or GAAP. You should not regard the inclusion of the projections and forecasts described herein as a representation or warranty by or on behalf of the KJMC Group, or specifically KJMC CAPITAL MARKET SERVICES LIMITED, or the analysts or any other person that these projections or forecasts or their underlying assumptions will be achieved. For these reasons, you should only consider the projections and forecasts described in this report after carefully evaluation all the information in this report, including the assumptions underlying such projections and forecasts. This report is for information purposes only and this document/material should not be construed as an offer to sell or the solicitation of an offer to buy, purchase or subscribe to any securities, and neither this document nor anything contained herein shall form the basis of or be relied upon in connection with any contract or commitment whatsoever. The price and value of the investments referred to in this document/material and the income from them may go down as well as up, and investors may realize losses on any investments. Past performance is not a guide for future performance. Future returns are not guaranteed and a loss of original capital may occur. Actual results may differ materially from those set forth in projections. Forward‐looking statements are not predictions and may be subject to change without notice. KJMC Group and its affiliates accept no liabilities for any loss or damage of any kind arising out of the use of this report. This report/document has been prepared by the KJMC Group based upon information available to the public and sources, ( including company sources) believed to be reliable. Though utmost care has been taken to ensure its accuracy, no representation or warranty, express or implied is made that it is accurate or complete. KJMC Group or specifically KJMC Capital Market Services Ltd., has reviewed the report and, in so far as it includes current or historical information, it is believed to be reliable, although its accuracy and completeness cannot be guaranteed. This information herein was obtained from various sources; we do not guarantee its accuracy or completeness. This document does not have regard to the specific investment objectives, financial situation and the particular needs of any specific persons who may receive this document and should understand that statements regarding future prospects many not be realized. Investors should note that income form such securities, if any, may fluctuate (both downside or upside), and that each security’s price or value may rise or fall. Accordingly, investors may receive back less than originally invested. Past performance is not necessarily a guide to future performance.
Analyst Certification I hereby certify that the views expressed in this document reflect my personal views. I also certify that no part of my respective compensation was, is, or will be, directly or indirectly, related to the views expressed in this document. I do not own any amount of stock in the company recommended/covered in this report.
General data sources Company, Capitaline, Public domain, Bloomberg.
3 Bajaj Corp Ltd
Contents
Investment Rationale ............................................................................... 4
IPO Details & Recent Announcements ............................................... 10
Risk & Concern........................................................................................ 11
Financial Outlook.................................................................................... 12
Competitive Profile................................................................................. 13
Valuation.................................................................................................. 14
Sensitivity Analysis ................................................................................ 15
Peer Comparison..................................................................................... 15
Quarterly performance........................................................................... 15
Financial Summary................................................................................. 16
Annexure 1 – Company Background................................................... 17
Annexure 2 - Industry ............................................................................ 19
4 Bajaj Corp Ltd
Investment Rationale
Bajaj Almond Drops Hair Oil (BAHO) – Key brand in the portfolio
Leader in its segment, the product dominates with over 52% market share in the Rs 7.5 bn Light Hair Oil segment and contributes approximately 95% to the topline of Bajaj Corp Ltd. The LHO segment grew at CAGR (FY06 to FY10) of 16% in volume terms and 24% in value terms against which the sales of BAHO grew at 29% and 39% respectively. BAHO is the brand which is driving LHO segment and in turn the overall market. Strong presence in the market along with high brand equity of Bajaj Almond Drops will be instrumental in launching the future products.
I. Strong Pricing Power
BAHO is placed in the premium segment and currently sells at Rs 42 for 100 ml which is higher than most of its competitors. The company has been successful in increasing its prices from Rs 28 for 100ml in March’03 to Rs 42 in May’10 (CAGR of 6%), without disturbing the popularity of product. The brand’s strong pricing power is evident from its market share growth from 31.4% in FY06 to 52.3% till Dec 2010. In future, we believe the company would be able pass on input cost pressure to the customers through an annual average price increase of 6 to 7%.
LLP price change vis a vis BAHO price change % Price increase vis a vis Market share growth
7.8%
-8.9%
45.7%
-39.1%
30.6%
6.7%0.0%
18.8%
5.3% 5.0%
-50.0%-40.0%
-30.0%-20.0%-10.0%
0.0%10.0%
20.0%30.0%40.0%
50.0%60.0%
Mar 07 Mar 08 Mar 09 Mar 10 Dec 10
LLP prices % BAHO price %
31.4%
36.7%
40.3%
46.5%
50.3%52.3%
3032 32
3840
42
25%
30%
35%
40%
45%
50%
55%
Mar 06 Mar 07 Mar 08 Mar 09 Mar 10 Dec 1025
30
35
40
45
50
55
(Rs
per 1
00 m
l)
Market Share Price (Rs per 100 ml)
Source: Company, KJMC Research
II. Well placed amongst competitors Rank 1 2 3
Brand Name Bajaj Almond Drops Hair Oil (Bajaj Corp
Ltd.) Keo Karpin (Deys
Medical) Hair & Care (Marico)
Mkt share as on Feb '11 (Volume based) 49.10% 18.70% 16.20%
Price Rs. per 100 ml 42 35 40 Source: Company, KJMC Research
III. Targeting market share of 65%
The management has indicated that the product is currently in its growth stage and has an ambitious plan to increase the current market share from 52.3% to 65% by FY15. This figure can be achieved by exploring the eastern and southern region of India where the current penetration is low. Geographically eastern region contributes 17.8% to the total sales of BAHO where more headroom for growth is available while southern market contributes a meager 2.6% which is a difficult market to penetrate as consumers have strong inclination towards coconut oil.
5 Bajaj Corp Ltd
IV. Unique Selling Proposition (USP)
Identified by its unique selling proposition of real almond extracts and 300% more Vitamin E than coconut oil, it has created high brand equity for the product. Packaging in glass bottle sets it apart from the competitors giving it a rich look and the feel of a value product. It also helps in retaining the aroma, the essential qualities of Almond extract & Vitamin E.
Right mix available to successfully launch future products while acquisition is on the horizon
The Company plans to launch 4 new products in the personal care segment to leverage its vast distribution network and to capitalize on its existing brand equity. It possesses sufficient cash which was raised through the IPO to meet its objective and has an experienced management team to devise an efficient strategy for promotion of new products. The management is also eyeing an acquisition of a strong regional brand which it can place on a national platform.
Present Stage of each planned products Products Stage of development
Product 1 Test Market over. National launch due
Product 2 Consumer Testing of product currently on
Product 3 Communication being worked on. Product ready
Product 4 Product ready. Currently being Test marketed Source: Company, KJMC Research
Planned Expenditure on promotion of future products* Rs Mn
Products Year 1 Year 2 Year 3 Year 4
Product 1 698.5 191.5 260.5 337.1
Product 2 398.9 118.2 126.3 154.4
Product 3 454.9 142.3 147.0 165.9
Product 4 556.9 155.3 179.5 222.1 Source: Company, KJMC Research
*The planned expenditure includes amount raised from IPO as well as from internal accruals.
Right mix available for
successful launch of 4 new products
Sufficient Cash to promote products
Experienced Management
Team
Existing Brand Value
Strong Distribution
Network
6 Bajaj Corp Ltd
I. Strong Distribution Network
The company reaches consumers through 1.90 mn retail outlets serviced by 5477 distribution stock points for direct distribution and 9900 wholesalers for indirect distribution of products. The distribution outlets are strategically spread across India so as to allow the company to compete on a national scale. In addition, the distribution network is supported by a comprehensive Management Information System (MIS) whereby the sales reports are generated by the on‐the‐ground sales force.
Increase in Stockists Geographical Distribution of Stockist
1480 1566 1655 1777
3347
4445
5477
0
1000
2000
3000
4000
5000
6000
FY05 FY06 FY07 FY08 FY09 FY10 9MFY11
(nos
)
North, 41.50%
East, 24.00%
West, 13.30%
Central, 11.90%
South, 9.20%
Source: Company, KJMC Research
II. Distribution Structure
Source: Company presentation 31.1.2011, KJMC Research
Factory (5) Own – Himachal Pradesh – 2, Uttarakhand – 1
Third Party - Himachal Pradesh – 1, Rajasthan - 1
Central Warehouse (1)
Regional Distribution Centre (32)
Urban Distribution Rural Distribution
Redistribution Stockist (1985)
Super Stockist (132)
Sub Stockist (3492)
Retail Outlets (876,295) Retail Outlets (867,157)
7 Bajaj Corp Ltd
III. Sufficient Cash available
Through the recent IPO, the company raised Rs 2970 mn of which Rs 2200 mn will be deployed for promotion of future products and Rs 500 mn for acquisition and other strategic initiatives. The deployment of funds for promotion is scheduled over a period of 3 years among the four product launches. In addition the company generates healthy cash flow at operational level; it generated Rs 860.8 mn for FY10 and will continue to generate healthy cash flows in future on account of negative working capital cycle.
Net cash from operating activities
513.8
860.8965.6
1034.4
1206.0
0.0
200.0
400.0
600.0
800.0
1000.0
1200.0
1400.0
FY09 FY10 FY11E FY12E FY13E
Rs
in M
n
Source: Company, KJMC Research
IV. Efficient management team & existing brand equity
The company possesses an efficient team of professionals with rich experience in their respective field who will be involved in devising a well organized strategy in successfully taking the company towards its goal. In addition, the strong brand equity of Bajaj Almond drops, created over the years since its inception in 1991, will be instrumental in launching future products.
8 Bajaj Corp Ltd
Trend towards ‘Premiumization’
Increasing urbanization with improvement in per capita disposable income has accelerated the trend towards buying premium products. The ‘premiumization’ trend can be observed primarily in the top two income groups, the rich and the upper middle class. Coupled with ‘premiumization’, retail expansion (particularly large format stores) will drive the demand for consumption of premium products. We believe Bajaj Corp Ltd with its offering in hair oils is well positioned to benefit from this favourable change.
For Bajaj Almond Drops the consumer is
Past demographic profile of India Estimated change in demographic profile of India
Impact on Bajaj Almond Drops
(premium category product)
2001 - 2010 Upto 2016 Upto 2020
Based on Location : Urban - 69% : Rural - 31%
Urban population grew at 2% annual CAGR while proportion of Urban: Rural was 28:72
Urban population is expected to grow at 3% annual CAGR while proportion will change to 32:68
Urban population is expected to grow at 3.4% annual CAGR while proportion will change to 35:65
Based on Gender : Male - 55% : Female - 45%
The total population of India grew by annual CAGR of 1.5% and at same rate for male & female population while the overall proportion is 52:48 (male: female)
Total population is expected to grow by annual CAGR of 1.3%, for male at 1.3% & for female at 1.2%
Total population is expected to grow by annual CAGR of 1.1%, for male at 1.2% & for female at 1.0%
Based on Age Group : 15 to 39 years - 60% user
Major user age group grew at 1.9% annual CAGR
Expected to grow at 1.3% annual CAGR
Expected to grow at 1.1% annual CAGR
Based on Socio Economic Class (SEC) – Urban : A1 - 13% : A2 - 17% : B1 - 17% : B2 - 12%
Based on Household Distribution by Annual Income - Rich class (> INR 1
Mn) consists of 1% - Upper Middle class
(> INR 0.5 to 1 Mn) consists of 2% of the total population of india
- Rich class (> INR 1 Mn) expected to improve to 2% - Upper Middle class (> INR 0.5 to 1 Mn) to 5% to the total population of india
Per Capita disposable income
Per Capita disposable income grew at 14% annual CAGR.
Per Capita disposable is expected to grow at more than 15% annual CAGR.
Source: Mospi, Mckinsey Global Institute report, CII report, Company, KJMC Research
I. Benefit from organised retail expansion
The organized retail sector is witnessing high growth and the share of organized retail players in the retailing industry is expected to rise from 5% of the total market in 2008 to 14 ‐ 18 per cent of the total retail market and reach US$ 450 billion by 2015, according to Mckinsey & Company report. Large format stores like super market and hypermarket coupled with the
9 Bajaj Corp Ltd
retail expansion will be beneficial in increasing the penetration and drive the demand for consumption. Margins sustainable in future & Negative working capital cycle: The company recorded high margins of 29.5% at EBITDA level and 25.4% at PAT level for FY10. It continued with improved performance during the period 9MFY11 recording 31.1% EBITDA margins and 23.0% PAT margins. The relative fall in the PAT margin was on account of one time write off of IPO expenses.
Rising prices of LLP (Light Liquid Paraffin), which is a crude oil linked product, forms major part of raw material and is a challenge in the near term due to Libya & neighboring country crisis. Apart from LLP, packaging in form of glass bottles and vegetable refined oil also forms major part of raw material. We believe Bajaj Corp would be able to pass on the cost pressure by price hikes as it exhibited in the past without affecting the market share. The company makes close 57% at gross margin levels. On conservative note, we expect the EBITDA margins to remain within the range of 25 – 26% for FY12E & FY13E. On account of nil debt, PAT margins are likely to stabilise within the range of 24‐25% for FY12E & FY13E. Light Liquid Paraffin – Historical price trend
20.0
30.0
40.0
50.0
60.0
70.0
80.0
Apr-06
Oct-06
Apr-07
Oct-07
Apr-08
Oct-08
Apr-09
Oct-09
Apr-10
Oct-10
Rs
per L
itre
Source: KJMC Research
Cost Break up
% to Net Sales FY09 FY10 FY11E FY12E FY13E
Material Cost 45.0% 35.4% 43.1% 46.9% 46.2% Employee Cost 4.6% 4.2% 5.0% 5.3% 5.6% Selling & Distribution Cost 28.4% 30.0% 22.0% 21.6% 21.4% - A&P expenses 16.3% 17.8% 9.8% 9.4% 9.2% EBITDAM % 21.1% 29.5% 29.0% 25.3% 25.9%
Source: Company, KJMC Research Negative working capital cycle:
Another important factor contributing to company’s growth is its policy of selling on cash. Because of it, company has been able to maintain negative working capital. The debtor days are as low as 2 days while the current liability days are approximately 33 days. On account of strong receivables policy we expect the working capital cycle to remain negative in future.
10 Bajaj Corp Ltd
Working Capital Cycle (Days)
-9 -10 -9-7 -6
26 28 29 29 29
0 2 2 2 3
3833 33 33 33
-20
-10
0
10
20
30
40
50
FY09 FY10 FY11E FY12E FY13E
no. o
f day
s
Net Current Asset days (net of cash) Inventories (days)
Sundry Debtors (days) Current Liab Turn (days)
Source: Company, KJMC Research Strategy for business growth
The company proposes to expand the market share of its product including flagship product Bajaj Almond drops and other products like Brahmi Amla and Amla Shikakai. The company intends to make this possible by pursuing a strategy to convert the coconut oil users to light hair oil; since coconut oil users consume close to 60% in volume terms of the overall hair oil market.
The management has indicated that the Bajaj Almond Drops is currently in its growth stage. Once it will enter maturity stage, they will strategize to reduce the dependency on it by bringing down the contribution to revenue at 70% from current 95%.
Rural markets have emerged as strong consumers on the back of rising per capita disposable income and changing preferences towards branded quality products. This benefit of this opportunity will be taken by increased promotion of smaller SKU’s of 2 ‐ 5 ml (sachet) which provides affordability. For Bajaj Corp, sales contribution of sachets to total sales has increased from 0.6% in FY06 to 9.7% for 9MFY11.
In addition the management has indicated that future products it plans to launch very soon will target the major SEC’s (Socio Economic Class) groups and not just the premium class.
IPO Details & Recent Announcements IPO Details Issue of equity shares (nos. in Mn) 4.5 Issue size (Rs Mn) 2970.0 Issue Price (Rs) 660.0 Equity shares outstanding prior to issue (Mn) 25.0 Equity shares outstanding after the issue (Mn) 29.5 Face Value (Rs) 5.0 Market Cap post issue (Rs Mn) 19470 Listing Date 18th Aug, 2010
Objects of the Issue Estimated Expenditure (Rs Mn)
Promote future products 2200 Acquistions & other strategic initiatives 500 Genral Corporate Purposes 270 Total 2970
Source: Company, KJMC Research
11 Bajaj Corp Ltd
Board approves Sub-Division of Shares
Bajaj Corp Ltd has informed BSE that the Board of Directors of the Company at its meeting held on February 11, 2011, have decided to seek the approval by shareholders through Postal Ballot pursuant to the provisions of Section 192A of the Companies Act, 1956 read with the Companies (Passing of the Resolution by Postal Ballot) Rules, 2001, for the following:
1. Sub‐division of each of the Ordinary (Equity) Shares of the face value of Rs. 5 each in the Equity Share Capital of the Company fully paid‐up into 5 Ordinary (Equity) Shares of the face value of Re. 1 each fully paid‐up.
2. Amendment to the Capital Clause of the Memorandum of Association of the Company to reflect the aforesaid sub‐division.
Key Risk & Concerns Dependence on single brand
The company receives 95% of its total sales from one product which makes it vulnerable. Brand value erosion or decrease in sales can significantly impact the performance of the company. The company is in the process of diversifying the risk by increasing its product portfolio through new launches. Rising raw material prices
Light Liquid Paraffin forms a major part of its raw material and occupies close to 35% of its total cost. LLP being a crude oil derivative is subject to changes in international crude oil prices. Any sharp increase in its prices can contract the margins of the company and thus have an adverse effect on EPS.
Future products may not succeed
As the company is in process of launching the planned products it runs the risk of unproductive and failed launch. The consumer may not accept the new product which can also have an adverse impact on its existing brand value. Cost incurred in promotion may not generate the required return which again will impact its profitability.
Acquisition may be EPS decretive
As a part of the growth strategy, the company is on a lookout for acquisition of strong regional brand which it wants to place on a national platform. The company may fail to identify a fine tuned player for acquisition or after successful acquisition may fail to market it at national level. This can result in EPS decretive acquisition and impact the company’s sound working.
12 Bajaj Corp Ltd
Financial Outlook
Revenue growth to be 15.9% and 17% in FY12E & FY13E: We expect Bajaj Corp’s revenue to grow at a CAGR of 15.7% in FY10‐13E. After exhibiting a high growth rate of 35% in FY10 and a slower growth of 14% in FY11E on account of high base, we expect annual growth to gradually improve to 15.9% in FY12E and 17% in FY13E. The gradual improvement in growth would be driven by 8.4% & 10.4% volume growth and realization growth of 7% & 6% for FY12E & FY13E respectively.
Revenue Growth FY09-13E
2444.2
3299.93762.5
4362.5
5105.3
35.0%
14.0%15.9% 17.0%
0.0
1000.0
2000.0
3000.0
4000.0
5000.0
6000.0
FY09 FY10 FY11E FY12E FY13E
Rs
Mn
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
35.0%
40.0%
NET SALES Growth %
Source: Company, KJMC Research
High EBITDA & PAT margins: We expect EBITDA margins to contract by 370 bps in FY12E at 25.3% on the back of rising LLP prices. As shown below, the sharp expansion in margins for FY10 was on account of LLP prices cooling down after 2009 crude oil crisis. Going ahead in FY13E, we expect the EBITDA margins to improve marginally to 25.9% and PAT to remain at 23.0%. At these levels the margins are one the highest in FMCG industry.
Expect EBITDA & PAT margins at 25.3% and 23.0% in FY12E
21.1%
29.5% 29.0%
25.3% 25.9%
19.2%
25.4%
21.3%23.0% 23.0%
25.3%
15.0%
17.0%
19.0%
21.0%
23.0%
25.0%
27.0%
29.0%
31.0%
33.0%
35.0%
FY09 FY10 FY11E FY12E FY13E
EBITDA % PAT % PAT % (Adj)
Source: Company, KJMC Research Return on Equity
Pre IPO the company’s return on equity was high at 91% for FY09 and 211% for FY10. Post IPO, we expect ROE at 39.3%, 24.3% and 24.4% for FY11E, FY12E & FY13E respectively. The shareholders fund has increased from Rs 279.1 mn for FY10 to Rs 3790.7 mn in FY11E on account of IPO proceeds of Rs 2970 mn (Equity of Rs 22.5 mn and Securities premium Rs 2947.5 mn).
CAGR - 20.2% FY09-13E
One time IPO Exp w/off – Rs 189.5 mn
13 Bajaj Corp Ltd
Competitive Profile
Bajaj Almond Drops – Unbeaten player Bajaj Almond Drops capturing market share of Keo Karpin (LHO Segment)
23 27 32 37 43 47 49 49
42 37 33 2825 21 19 19
111 15 17 16 15 16 16
99 9 8 7 6 4 225
15 11 10 9 11 13 14
0%10%20%30%40%50%60%70%80%90%
100%
FY04 FY05 FY06 FY07 FY08 FY09 FY10 Apr10 -Feb 11
Mar
ket S
hare
%
Bajaj Corp's - Bajaj Almond Drops Dey Chemical's - Keo KarpinMarico's - Hair & Care HUL's - Clear ActiveOther brands
Source: Company, KJMC Research
Once a market leader, Keo Karpin has been losing its market share to Bajaj Almond drops since FY04. Bajaj Almond drops more than doubled its market share from 23% in FY04 to 49% in Feb 2011 while Keo Karpin lost from 42% to 19% for the same period. Other players in the segment Hair & Care from Marico and HUL’s Clear active have been unable to gain any significant market share. Currently Bajaj Almond Drops is the market leader with 49% marketshare based on volumes and 52.3% based on value.
Rank 1 2 3
Brand Name Bajaj Almond Drops Hair Oil Keo Karpin Hair & Care
Company Name Bajaj Corp Ltd. Deys Medical Marico
Category LHO LHO LHO
Product Differentiation / Value Proposition
Made from real Almond extracts, and
has 300% more Vitamin - E than
coconut oil
Olive Oil and Vitamin E
Non sticky & Lightest Perfumed hair oil
enriched with "Herbal Proteins"
Mkt share as on Feb '11 (Volume based) 49.10% 18.70% 16.20%
Price Rs. per 100 ml 42 35 40
Retail Outlets (nos. in Mn) 1.90 1.04 0.75
Source: Company, KJMC Research
Bajaj Almond Drops has differentiated itself from other players by offering Value proposition in the form of Almond oil. Other players like Hair & Care Almond Gold from Marico and Dabur Vatika Enriched Almond who offer similar proposition have been unable place their foothold in the segment which is evident from their market share of 0.4% and 1.1% respectively. Thus, bajaj almond drops emerges as clear winner amongst its competitors and we expect it to gain the additional market share in future although at a slower pace.
14 Bajaj Corp Ltd
Bajaj Brahmi Amla – Lagging behind
Bajaj Brahmi Amla which contributes close to 4% to the total turnover of the company has been lagging behind its competitors and has a market share of 2.7% within the Heavy Amla based hair oil segment. Dabur Amla is the market leader with a share of 65.6% followed by Shanti Amla Badam from Marico with market share of 13.3% within this space.
Valuation
Post IPO, the stock has corrected 41% after touching a high of Rs 812 on 18.08.2010. At CMP of Rs 480, the stock is available at P/E of 14.1x and 12.1x of its FY12E and FY13E earnings of Rs 34 and Rs 39.8 respectively. We have valued the stock using DCF valuation method and arrived at a target price of Rs 579 which is 17.0x and 14.5x its FY12E and FY13E earnings respectively. We initiate the coverage on the stock with “BUY” recommendation with potential upside of 21% over CMP.
DCF Model
Y/E 31st Mar FY2010A FY2011E FY2012E FY2013E
Net Profit 839.1 800.4 1001.9 1173.3
Depreciation 8.4 16.2 18.8 22.0
Capital Expenditure -128.4 -40.4 -37.8 -46.7
(Inc)/Dec in Non-Cash Working Capital 54.1 -42.0 11.9 8.6
FCF To Equity 773.2 734.2 994.9 1157.2
DCF Valuation
Assumed Terminal Year (N) FY2020E
Cash Flow at N+1 2083.4
Growth Rate (FY14-FY16) 15.97%
Growth Rate (FY17-FY20) 14.67%
Growth Rate (Post FY20) 4.00%
Cost of Equity (%) 12.60%
Terminal Value (N+1) 24226.0
Discounted Terminal Value 8326.0
Present Value of Equity till Terminal Year 8761.2
Total Discounted Value of Equity 17087.1
No. of Equity Shares (mn) 29.5
Price Target one year forward (Rs) 579.2
Discount Rate Calculation
Risk Free rate 8.10%
Risk Premium 6.00%
Adjusted Beta* 0.75
Cost of Equity 12.60% * Due to limited history of the company, we have taken average beta of closest peer group.
15 Bajaj Corp Ltd
Sensitivity Analysis
Volume & Realisation growth impact on EPS (FY12E) Volume Growth %
6.4% 7.4% 8.4% 9.4% 10.4% 5% 31.3 31.5 31.8 32.0 32.3 6% 32.4 32.6 32.9 33.2 33.4 7% 33.4 33.7 34.0 34.3 34.6 8% 34.5 34.8 35.1 35.4 35.7
Realisation
Growth %
9% 35.6 35.9 36.2 36.5 36.8
Volume & Realisation growth impact on Revenue growth (FY12E) Volume Growth %
6.4% 7.4% 8.4% 9.4% 10.4% 5% 11.6% 12.7% 13.7% 14.8% 15.8% 6% 12.7% 13.8% 14.8% 15.9% 16.9% 7% 13.8% 14.8% 15.9% 17.0% 18.0% 8% 14.8% 15.9% 17.0% 18.1% 19.1%
Realisation
Growth %
9% 15.9% 17.0% 18.1% 19.2% 20.2%
Peer Comparison Revenue Growth % EBITDA % PAT % P/E ROE % P/BV EV/EBITDA
Companies FY11E FY12E FY11E FY12E FY11E FY12E FY11E FY12E FY11E FY12E FY11E FY12E FY11E FY12E
Bajaj Corp Ltd. 14.0% 15.9% 29.0% 25.3% 21.3% 23.0% 17.7 14.1 39.3 24.3 3.2 2.7 8.9 6.9
Marico Ltd* 15.7% 16.7% 13.1% 13.5% 9.2% 9.5% 28.7 23.8 37.3 33.9 9.5 7.3 20.9 17.3
Jyothy Laboratories Ltd.* 32.7% 21.5% 14.4% 15.1% 12.4% 12.6% 19.7 15.9 14.8 15.0 2.6 2.4 16.3 12.9
Colgate Palmolive Ltd.* 13.8% 14.5% 23.7% 23.9% 18.9% 19.0% 26.1 22.7 114.1 103.3 27.8 22.2 20.0 17.4
Dabur India* 19.2% 24.0% 19.0% 18.9% 14.5% 14.4% 28.3 23.0 50.6 47.3 12.6 9.7 21.4 17.4
Emami* 21.0% 19.8% 22.9% 23.6% 18.9% 19.7% 25.4 20.3 33.6 35.1 8.4 7.1 21.1 17.1
Godrej Consumer* 79.4% 22.0% 18.4% 18.9% 13.2% 13.6% 25.2 20.0 33.5 30.8 6.9 5.8 20.6 16.4
HUL* 8.8% 11.1% 14.2% 14.7% 11.0% 11.3% 28.6 25.0 75.6 73.6 19.6 17.3 21.4 18.5
ITC* 18.9% 15.2% 34.7% 35.6% 23.0% 23.6% 27.2 23.0 32.3 33.3 8.2 7.2 17.5 14.8
Source: KJMC Research, *Bloomberg Consensus
Quarterly Financial Table Particulars Q3FY11 Q3FY10 % YoY 9MFY11 9MFY10 % YoY
Net Sales 858.8 692.2 24.1% 2488.3 2084.9 19.3%
Expenditure 601.4 484.9 24.0% 1714.4 1444.5 18.7%
Material Cost 375.6 276.8 35.7% 1041.5 813.8 28.0%
Employee Cost 40.0 36.0 11.1% 122.2 103.9 17.6%
Other Exp 185.8 172.1 8.0% 550.7 526.8 4.5%
EBITDA 257.4 207.3 24.2% 773.9 640.5 20.8%
EBITDAM % 30.0% 29.9% 10 bps 31.1% 30.7% 40 bps
Other Income 52.0 20.4 154.7% 79.8 47.9 66.6%
PBIDT 309.4 227.7 35.9% 853.7 688.4 24.0%
Depreciation 4.6 2.3 104.9% 13.3 6.0 121.5%
PBIT 304.8 225.5 35.2% 840.5 682.4 23.2%
Interest 0.4 0.6 -37.4% 0.8 0.9 -8.4%
PBT Before Exceptional Items 304.4 224.9 35.4% 839.7 681.5 23.2%
Exceptional Items -63.2 0.0 - -126.4 0.0 -
PBT after Exceptional Items 241.3 224.9 7.3% 713.3 681.5 4.7%
Tax 47.2 38.4 23.0% 141.1 116.5 21.1%
PAT 194.0 186.5 4.0% 572.2 565.0 1.3%
PATM % 22.6% 26.9% -430 bps 23.0% 27.1% -410 bps Source: Company, KJMC Research
16 Bajaj Corp Ltd
Financial Summary
Profit & Loss Statement Rs mn
Y/E, Mar (Rs. mn) FY09 FY10 FY11E FY12E FY13E
Net Revenue 2,444.2 3,299.9 3,762.5 4,362.5 5,105.3
Growth % 35.0% 14.0% 15.9% 17.0%
Material Cost 1,099.0 1,167.8 1,622.4 2,045.9 2,357.6
Employee Expenses 113.0 138.6 188.1 230.4 287.5
Selling & Distribution Exp. 694.7 989.6 827.7 942.1 1,092.1
Total Expenses 1,928.0 2,326.0 2,672.5 3,257.5 3,782.4
Growth % 20.6% 14.9% 21.9% 16.1%
EBITDA 516.2 973.9 1,090.0 1,105.1 1,322.8
Growth % 88.7% 11.9% 1.4% 19.7%
EBITDAM % 21.1% 29.5% 29.0% 25.3% 25.9%
Other Income 17.7 51.3 116.8 168.0 168.0
Interest & Financial Exp 0.6 1.3 1.5 1.7 2.0
Depreciation 4.4 8.4 16.2 18.8 22.0
PBT 528.9 1,015.5 1,189.1 1,252.5 1,466.8
Tax 59.1 176.4 199.2 250.6 293.5
Reported PAT 469.8 839.1 800.4 1,001.9 1,173.3
Growth % 78.6% -4.6% 25.2% 17.1%
Net Margin% 19.2% 25.4% 21.3% 23.0% 23.0%
E/O Item 0.0 0.0 151.7 0.0 0.0
Adjusted PAT 469.8 839.1 952.1 1,001.9 1,173.3
Growth % 78.6% 13.5% 5.2% 17.1%
Balance Sheet Rs mn
Y/E, Mar (Rs. mn) FY09 FY10 FY11E FY12E FY13E
Equity Share Capital 50.0 125.0 147.5 147.5 147.5
Reserves 466.3 154.1 3,643.2 4,299.9 5,041.8
Networth 516.3 279.1 3,790.7 4,447.4 5,189.3
Preference Share Capital 0.0 0.0 0.0 0.0 0.0
Total Share Holders' Fund 516.3 279.1 3,790.7 4,447.4 5,189.3
Loan Funds 0.0 0.0 0.0 0.0 0.0
Total Liabilities 516.3 279.1 3,790.7 4,447.4 5,189.3
Gross Block 50.0 196.4 236.8 274.5 321.3
Less: Accmulated Depreciation 4.3 12.8 29.0 47.8 69.8
Net Block 45.7 183.6 207.8 226.7 251.5
Capital Work In Progress 18.0 0.0 0.0 0.0 0.0
Investments 0.0 21.0 21.0 21.0 21.0
Current Assets 679.8 320.3 3,825.5 4,525.9 5,299.2
Inventories 77.4 98.9 126.9 160.0 184.4
Debtors 3.3 29.0 21.0 28.2 38.6
Cash&Bank 510.3 167.5 3,612.8 4,262.6 4,988.4
Loans&Advances 88.8 24.8 64.8 75.1 87.9
Current Liabilities & Prov 229.8 268.2 286.1 348.7 404.9
Net Current Assets 450.0 52.0 3,539.4 4,177.2 4,894.3
Net Deferred Tax 2.1 -0.6 -0.6 -0.6 -0.6
Total Assets 516.3 279.1 3,790.7 4,447.4 5,189.3
Cash Flow Statement Rs mn Y/E, Mar (Rs. mn) FY09 FY10 FY11E FY12E FY13E
Pre-Tax Profit 529.0 1,015.6 999.6 1,252.5 1,466.8
Depreciation & Non Cash 4.2 8.4 16.2 18.8 22.0
Interest & others -12.0 -46.0 1.5 1.7 2.0
Chg in Working Cap 57.8 54.1 -42.0 11.9 8.6
Tax Paid -61.7 -169.8 -199.2 -250.6 -293.5
Operating CashFlow 513.8 860.8 965.6 1,034.4 1,206.0
Capex -31.9 -128.4 -40.4 -37.8 -46.7
Free Cash Flow 481.9 732.4 735.7 996.6 1,159.2
Increase in Equity Share Capital 0.0 0.0 22.5 0.0 0.0
Increase in Share Premium Account 0.0 0.0 2,947.5 0.0 0.0
Share issue Expenses -0.4 -22.8 -189.5 0.0 0.0
Dividend Paid & tax paid 0.0 -1,079.3 -258.9 -345.1 -431.4
Net Cash Used in Financing Activities -0.4 -1,102.1 2,521.6 -345.1 -431.4
Net Change in Cash 497.2 -342.8 3,445.3 649.7 725.8
Opening Cash Position 13.2 510.3 167.5 3,612.8 4,262.6
Closing Cash Position 510.4 167.5 3,612.8 4,262.6 4,988.4
Ratios Y/E, Mar (Rs. mn) FY09 FY10 FY11E FY12E FY13E
Profitability/Returns %
EBITDA Mgn 21.1% 29.5% 29.0% 25.3% 25.9%
PAT Mgn 19.2% 25.4% 21.3% 23.0% 23.0%
Adj PAT Mgn 19.2% 25.4% 25.3% 23.0% 23.0%
ROE 91.0% 211.0% 39.3% 24.3% 24.4%
Per Share Data (Rs/share)
Adj. EPS 47.0 33.6 33.3 34.0 39.8
CEPS 47.4 33.9 32.8 34.6 40.5
BVPS 51.6 11.2 128.5 150.8 175.9
DVPS 0.3 36.8 7.5 10.0 12.5
Valuations (X)
Adj. PER 10.2 14.3 14.4 14.1 12.1
Adj. CPER 10.1 14.2 14.6 13.9 11.8
P/BV 9.3 43.0 3.7 3.2 2.7
Mcap/Sales 2.0 3.6 3.8 3.2 2.8
EV/EBITDA 8.3 12.1 9.7 8.9 6.9
Dividend Yield % 0.1% 7.7% 1.6% 2.1% 2.6%
Turnover (X Days)
Debtor Days 0.5 1.8 2.0 2.4 2.8
Inventory Days 25.7 27.5 28.5 28.5 28.5
Current Liability Days 38.2 32.7 32.7 32.7 32.7
Net Current Asset days (net of cash) -9.0 -9.7 -9.2 -6.6 -6.4 Source: Company, KJMC Research
17 Bajaj Corp Ltd
Annexure – 1
Company Background
Bajaj Corp Ltd., a leading producer of hair oils in India is a part of Shishir Bajaj Group of Companies. The Group comprises of major companies like, Bajaj Hindustan Ltd, Bajaj Eco‐tec Products Ltd, Bajaj Infrastructure Development Company and Bajaj Corp Ltd.
The legacy of Bajaj Corp Ltd. dates back to 1953, when Mr. Kamal Nayan Bajaj established Bajaj Sevashram Ltd (BSL) to market and sell hair oils and other beauty products. Pursuant to the Bajaj family settlement, the business was demerged to form Bajaj Consumer Care Ltd (BCCL) in 2001 when BSL transferred its operating business and assigned all trademarks to BCCL. Subsequently, BCCL entered into Trademark License agreement with Bajaj Corp Ltd. for a period of 99 years in 2008. As per the agreement, BCL will pay Royalty @ 1% of annual net sales turnover to BCCL.
Bajaj Corp Ltd. commenced its operations in year 2008 and currently manufactures products through three company‐operated manufacturing facilities and third party facilities. All the company operated facilities and third party facilities in Parwanoo, HP are under tax free zones and enjoy benefits of Excise duty and Income Tax exemption as mentioned below.
Details of manufacturing facilities
Year Event Owned
or Leased
Products produced Current Capacity (Mn Ltrs)
Total Production
in 2010 (Mn Ltrs)
Excise Duty Exemption
Income tax Exemption
Company operated facilities
2008 1st manufacturing plant at Parwanoo in Himachal Pradesh Leased Almond Drops and Amla
Shikakai products 22.7 7.5 For 10 years from 31.03.2009
2009 2nd manufacturing plant at Dehradun in Uttar Pradesh Owned Almond Drops hair oil 16.9 2.0 For 10 years from
31.03.2010
2010 3rd manufacturing plant at Paonta Sahib in Himachal Pradesh
Owned - 35.0 - For 10 years from 31.03.2010
100% for 1st 5 years, 30% next 5
years
Sub Total 74.6 9.5
Capacity Utilisation 24%
Third party facilities
Parwanoo, Himachal Pradesh Almond Drops, Brahmi Amla and Jasmine hair oil 1.7 For 10 years from
31.03.2003 -
Udaipur, Rajasthan Black tooth powder 9.0
0.0 N.A N.A
Total 83.6 11.2 Source: Company, KJMC Research
Product Profile
The product range of Bajaj Corp Ltd. consists of principle product Bajaj Almond Drops hair oil and other products in hair oils and oral care category.
Product Category Contribution to Sales (FY10)
Market Share FY 09-10 (% by value)
Almond Drops Light hair oil 92.4% 50.3% Brahmi Amla Heavy Amla 4.7% 3.3% Amla Shikakai Heavy Amla 1.7% 1.6% Black Tooth Powder Oral care 1.0% -
Source: Company, KJMC Research
18 Bajaj Corp Ltd
Key Management Detail
Mr Kushagra Bajaj
He is non executive chairman and one the promoters of the company. He has 10 years of experience in the consumer & sugar industry and holds directorship other bajaj group companies including Bajaj Hindusthan Ltd. Age 33 years.
Mr. Roshan F. Hinger
He is the Vice Chairman and Whole time director of the company with over 45 years of experience in FMCG business. Age 70 years.
Mr Sumit Malhotra
He is Whole time director of the company and is responsible for leading sales and marketing department of the company. He has 23 years of experience in FMCG sector. Age 48 years.
Mr Apoorv Bajaj
He is executive president and also a promoter of the company. Age 29 years.
Mr. V.C. Nagori
He is Vice President ‐ Finance and has 25 years of experience in finance, taxation, audit and legal compliance. Age 51 years.
Mr. D. K. Maloo
He is General Manager ‐ Finance and company secretary. He has 22 years of experience in finance, taxation, audit and legal compliance. Age 49 years.
Key Promoters of the company
Corporate Promoter Bajaj Consumer Care Ltd Mr Shishir Bajaj Mrs Minakshi Bajaj Mr. Kushagara Bajaj
Individual Promoter
Mr. Aproorv Bajaj
19 Bajaj Corp Ltd
Annexure - 2
Industry
The overall Indian FMCG market is estimated at Rs 1611 bn of which hair care market consists of approx Rs 92 bn or 8% of total FMCG market, as per Neilsen Retail Audit report.
Hair Oil is > 55% of the overall Hair Care industry in India Only branded products data FY 09-10 Source: Company, KJMC Research * Value based share of Hair Care market
Hair Oil Industry
Usage of hair oil is ingrained into Indian traditional habit. Unlike the western world where hair oil is more of cosmetic product, in India it is perceived to offer nutritional benefits like hair strengthening, faster & better growth, and reduce hair fall. There are two main types of hair oil available in the Indian market, coconut hair oil and perfumed hair oil.
Coconut hair oil finds its deep rooted presence in the south Indian market as the people consider the same to be sacred and interchangeably use it as edible oil. The coconut hair oil consists of approximately 51% of the overall Rs 50 bn hair oil market. Perfumed hair oil segment includes Amla based hair oils, cooling oils and light hair oils which make up rest half of the market.
Light hair oil segment (LHO)
Amongst the perfumed hair oil segment, the light hair oil segment make up 14% of the hair oil industry. The sector has exhibited high growth rate of 24% CAGR (value based) during the period FY06 to FY10 against overall hair oil market growth rate of 17.6% (value based) for the same period. The high growth can be attributed to changing consumer preference towards branded quality products, favorable demographic profile of India, increase
Hair Oil Market (Rs 50.4 bn)
FMCGRs 1161 bn
Hair CareRs 92 bn
Shampoo Rs 28,400 mn (31.0%)
Perfumed Oil Rs 29,300 mn (32.0%)
Coconut OilRs 21,100 mn (23.1%)
Hair Conditioners Rs 800 mn (0.9%)
Hair DyesRs 11,900 mn (13.0%)
Coconut based Oils
(51.0%)*
Heavy Amla based Oils (15.0%)*
Cooling Oils(12.0%)*
Light Hair Oils (14.0%)*
Others(8.0%)*
8%
20 Bajaj Corp Ltd
in per capita disposable income, increase in urban population, etc. It is basically known for its non sticky characteristic due to which it is popular among the younger generation.
The LHO sales are concentrated in northern region of India while East and West contribute equally for the balance with very low penetration in southern market which is dominated by coconut oil. Due to comparatively high pricing, the LHO segment is urban dominated segment. With an aim to improve the rural penetration smaller SKU’s of size 2‐5 ml and 20‐45 ml are introduced which makes the product affordable. Currently, smaller SKU’s contribute 3% of the total sales while larger SKU’s of 100 ml and 200 ml contribute 44% and 21% respectively.
Breakup of LHO market Location wise Regionwise SKU wise
Urban, 67%
Rural, 33%
North, 52%
East, 22%
West, 22%
South, 4%
100ml, 44%
300ml, 9%
50ml, 18%
200ml, 21%
20-45ml, 1%
75ml, 5%2-5ml, 2%
Source: Company, KJMC Research
Heavy Amla Hair Oil
The segment has shown valuebased CAGR of 15.5% for the period FY06‐10. It is primarily an urban driven market and tends to be geographically concenterated in the northern region of India. The leading player in this segment is Dabur Amla with a market share of 65.6%.
Cooling Oil
Cooling hair oil has emerged as an important segment in the Indian hair oil market. It helps in cooling the scalp during the harsh summer months. The leading player in this segment is Navratna Cooling oil by Himami with a market share of 41.1% followed by Himgange Oil with market share of 28.7%. The CAGR of the category has been 15.3% for FY07‐10.
GDP vis a vis Industry and Sector performance
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
35.0%
40.0%
45.0%
FY04 FY05 FY06 FY07 FY08 FY09 FY10
Gro
wth
%
GDP FMCGIndian hair oil market (INRmn) Light hair oilsHeavy Amla based hair oil Cooling Hair Oil
Source: Company, KJMC Research
21 Bajaj Corp Ltd
Overall Hair Oil Market – Volume (K. Ltrs) Overall Hair Oil Market – Value (Rs Mn)
164750
194604210758 222003 224688
0
50000
100000
150000
200000
250000
FY 06-07 FY 07-08 FY 08-09 FY 09-10 Apr 10-Feb11
Kilo
Litr
es
35354
43219
49864 52370 53237
0
10000
20000
30000
40000
50000
60000
FY 06-07 FY 07-08 FY 08-09 FY 09-10 Apr 10-Feb11
Rs
Mn
Source: Company, KJMC Research
Light Hair Oil Market – Volume (K. Ltrs) Light Hair Oil Market – Value (Rs Mn)
14828
1797219422 20477 20377
0
5000
10000
15000
20000
25000
FY 06-07 FY 07-08 FY 08-09 FY 09-10 Apr 10-Feb11
Kilo
Litr
es
4439
5762
68827471 7537
0
1000
2000
3000
4000
5000
6000
7000
8000
FY 06-07 FY 07-08 FY 08-09 FY 09-10 Apr 10-Feb11
Rs
Mn
Source: Company, KJMC Research
Heavy Amla Hair Oil Market – Volume (K. Ltrs) Heavy Amla Hair Oil Market – Value (Rs Mn)
21177
24573 2451325844 26260
0
5000
10000
15000
20000
25000
30000
FY 06-07 FY 07-08 FY 08-09 FY 09-10 Apr 10-Feb11
Kilo
Litr
es
5523
67717425
7847 8014
0
1000
20003000
4000
5000
60007000
8000
9000
FY 06-07 FY 07-08 FY 08-09 FY 09-10 Apr 10-Feb11
Rs
Mn
Source: Company, KJMC Research
CAGR 14% CAGR 10%
CAGR 11% CAGR 19%
CAGR 7% CAGR 12%
22 Bajaj Corp Ltd
Mr. Girish Jain Executive Director [email protected] 2288 5201 (B)
Mr. Suresh Parmar A.V.P. ‐ Institutional Equities [email protected] 4094 5551 (D)
Mr. Vipul Sharma A.V.P. ‐ Institutional Sales [email protected] 4094 5556 (D)
Recommendation Parameters
Expected returns in absolute terms over a one‐year period Buy ‐ appreciate more than 20% over a 12‐ month period Accumulate ‐ appreciate 10% to 20% over a 12‐ month period Hold / Neutral ‐ appreciate up to 10% over a 12‐ month period Reduce ‐ depreciate up to 10% over a 12‐ month period Sell ‐ depreciate more than 10% over a 12‐ month period
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