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411
490
490
19%
NA
533229
438/340
6,065
105
9,181
1M 3M 12M
Absolute 13.0 10.0 9.3
Rel.to Nifty 10.1 -1.5 -12.4
3QFY17 2QFY17 1QFY17
Promoters 66.9 66.9 66.9
Public 33.1 33.1 33.1
Others - - -
Total 100.0 100.0 100.0
Financials FY15 FY16 FY17E FY18E FY19E
Sales 826 876 792 780 844
EBITDA 239 274 265 242 259
Net Profit 173 196 220 220 235
EPS 12 13 15 15 16
ROE 35% 41% 44% 43% 44%
2
Rs,Cr
Rajeev Anand
Please refer to the Disclaimers at the end of this Report
The Company is giving dividend regularly and, at the present price, its dividend
yield is approx. 2.8% which is positive for long term investment. It gives cash
flows to the investor at regular period and a reason to hold company for long
term.
BAJAJCORP’s International business grew by 72% YoY in Q3FY17 and
contributed more than 5% in this quarter. Company has robust plans for exports
and Planning for entering in larger market Russia, Indonesia and Egypt going
ahead.
BAJAJCORP’s ROE is improving for Last three year and we expect it to
improve further. We expect improvement in company’s ROE from 41% (FY16) to
44%, 43% and 44% in FY17E,FY18E and FY19E respectively with 93% dividend
payout. BJAJCORP is presently trading at 26 times of FY19E expected EPS of Rs
16. Considering High ROE , strong balance sheet ,reasonable dividend yield with
amble growth drivers going forward we maintain `BUY’ with our previous target of
Rs 490.
BSE Code The Company’s flagship brad Bajaj Almond Drop hair oil has strong presence in
the light hair oil market with approx. 60% of market share. In last eight years, it
has continuously gained market share which shows strength of the brand. On the
other hand, BJAJCORP has one of the best RoE among our horizon companies
after HINDUNILVR and COLPAL. We expect improvement in company’s RoE
from 41% (FY16) to 44%,43% and 44% in FY17E,FY18E and FY19E respectively.
NSE Symbol BAJAJCORP
52wk Range H/L
Mkt Capital (Rs Cr)
Av. Volume(,000)
Nifty
CMP GST may be the game changer for the well established FMCG players.
BAJAJCORP deals in Hair oil and In Hair oil segment approx. 50% of market is
dominated by unorganized players. Going forward we expect BAJAJCORP to gain
market share led by lower price differential with unorganized players. This shift of
market share will happen gradually which will lead to growth for BAJAJCORP for
coming 5-7 years.
Target Price
Previous Target Price
Upside
Change from Previous
BUY
BAJAJ CORP LTD. 11th April. 2017
Narnolia Securities Ltd
BBAJJAAAJJJJ CCCCOOOORRRRPPPP LLLLTTTTDDDD.
Company Update
533229BSE CoCodedede ThThThe Company’s
oi
usly
AJ
IL
16
de
un
le
wi
ears
4141411
490
4900
19%%
NA
CMCMPPPP GSGSGST may be
BABABABAJAJCORP de
dodododominated by un
mamamamarket share le
mamarket share wi
cocococoming 5-7 years
Target P Pririricece
PrPrevious Target Price
UpUpside
Change from Previous
Company Update
Market Data
533229
43438/8/343400
6,6,060655
101055
9,18181
BSE Code ThThThe Company’s
thththe light hair oi
has continuously
other hand, BJAJ
afafafter HINDUNIL
from 41% (FY16
NSNSE Symbol BAJAJCORORPP
5252wkwk R Range H/L
MkMkt t CaCapitatal l (R(Rs s CrCr))
AvAvAvAv. VoVolulumeme(,(,00000)0)
NiNiftftyy
Stock Performance
1M 3M 12M
Absolute 13.0 10.0 9.3
Rel.to Nifty 10.1 -1.5 -12.4
ThThThe Company
yiyiyieleleleld is approx
flflowowowows to the inve
tetetermrmrm
9,18181NiNifty
Stock Performance
Share Holding Pattern-%
Financials
imimimprove further.
444444%, 43% and
payout. BJAJCO
16. Considering
amble growth dr
Rs 490.
PrPromoters 66.9 66.9 6666.9.9
PuPublblicic 33.1 33.1 3333.1.1
OtOthehersrs - - -
ToTotatal 100.0 100.0 100.0.00
and Planning fo
ahahahead.
BABABAJAJCORP’s
3QFY17 2QFY17 1QFY17
PrPromoters 66.9 66.9 66.9.9
BABAJAJCORP’s
cocontributed more
Company Vs NIFTY
s flagship brad Bajaj Almond Drop hair oil has strong presence inThThThe Company’s
Strong brand presence and RoE:
International business grew by 72% YoY in Q3FY17 and
teteterm.
BABABAJAJCORP’s
Robust plan for Exports:
11th April.
the game changer for the well established FMCG players.GSGSGST may be
GST, a game changer:
is giving dividend regularly and at the present price its dividendThThe Company
Healthy Dividend Yield Gives holding comfort:
s ROE is improving for Last three year and we expect it toBABAJAJCORP’s
Outlook
80
85
90
95
100
105
110
115
120
125 BAJAJCORP NIFTY
3
BAJAJCORP
• The company has to increase direct reach but it will not cost much.
• Due to demonetization, whole sale trade is impacted and there is no sign of it coming back in near term.
• Management is looking for acquisition but Target Company is still not in the view.
• 27% rise in modern trade volume in this quarter. Modern trade contributed 5.2% of the total sales in Q3FY17.
• Contribution from rural remained 42.5% in this quarter and in pre demonetization it was 43.6%.
• New product launch will happen in 1QFY18.
• Announced temporary incentive to channel partners.
• Canteen trade reduced by13.5% in this quarter.
• The company has reserve of LLP till March 2018. It can go beyond this if volume will remain like that.
• LLP prices remained Rs46/kg for this quarter and presently, it is trading at Rs 54/kg.
• Volume growth in light hair oil 2.1%
• International business grew by 72% YoY in this quarter and contributed more than 5% in this quarter.
• Plans for entering in larger market Russia, Indonesia and Egypt is under way.
BAJAJ CORP is engaged in the business activity of trading and manufacturing of cosmetics, toiletries and other personal care
products. It is a fast moving consumer goods (FMCG) company. The Company's products include Bajaj Kailash Parbat Thanda
Tel, Bajaj Almond Drops Hair Oil, Bajaj Brahmi Amla Hair Oil, Bajaj Jasmine Hair Oil, Bajaj Nomark Oily Skin Face Wash, Bajaj
Nomarks Herbal Scrub Soap, Bajaj Nomark Oily Skin Cream, Bajaj Nomarks Neem Soap, Bajaj Nomarks Oil Control Soap and
others. The Company has approximately nine Factory, of which four units are situated in Himachal Pradesh , three units are
situated in Uttrakhand for manufacturing of various variants of hair oils and Nomarks and other unit is situated in Guwahati and
one unit Bangladesh.The company reaches consumers through 3.6mn retail outlets serviced by 7707 distributors and 11500
wholesalers.
Please refer to the Disclaimers at the end of this Report
Narnolia Securities Ltd
About The Company
The company has to increase direct reach but it will not cost much
Q3FY17 Result Concall Highlights
ROE and P/E:
29% 35% 41% 44% 43% 44%
23
29 29
27 2725
20%
25%
30%
35%
40%
45%
50%
5
10
15
20
25
30
35
FY14 FY15 FY16 FY17E FY18E FY19E
ROE P/E
Dividend Yield:
2.80%
1.73%
1.46%
1.12%0.99%
0.78%0.65%
0.34%
0.20%
0.70%
1.20%
1.70%
2.20%
2.70%
3.20%Dividend Yield
4
BAJAJCORP
Please refer to the Disclaimers at the end of this Report
Narnolia Securities Ltd
Net Sales and PAT (in cr.)
Prices of Light Liquid Paraffin(LLP) and Refined Oil
Almond Drops Hair Oil (ADHO) Volume Gr(%)YOY
6%
1%
-4%
2%2%
-4%
-6%
-4%
-2%
0%
2%
4%
6%
8%
2QFY16 3QFY16 4QFY16 1QFY17 2QFY17 3QFY17
ADHO Volume Gr(%)YOY
208
196 20
9
204
197
187
47 49 54 5258 58
0
50
100
150
200
250
2QFY16 3QFY16 4QFY16 1QFY17 2QFY17 3QFY17
Net Sales(in cr) PAT(in cr)
59.51 58.8254.7
46.41 43.91 46.37
73.15
82.02
93.76
86.21
75.97
83.97
-10
10
30
50
70
90
110
1QFY16 2QFY16 3QFY16 4QFY16 1QFY17 3QFY17
Light Liquid Paraffin(LLP) price(Rs/Kg) Refined Oil price(Rs/kg)
FY16 FY17E FY18E FY19E FY16 FY17E FY18E FY19E
Revenue 876 792 780 844 EPS 13.3 14.9 14.9 15.9
Other Income 29 41 33 34 Book Value 32.6 33.7 34.8 36.0
Total Revenue 905 833 813 878 DPS 13.8 13.8 13.8 14.7
COGS 298 274 280 306 Payout (incl. Div. Tax.) 104% 93% 93% 93%
GPM 66.0% 65.5% 64.1% 63.8% Valuation(x)
Other Expenses 257 193 187 203 P/E 29 27 27 25
EBITDA 274 265 242 259 Price / Book Value 11.8 12.0 11.6 11.3
EBITDA Margin (%) 31% 33% 31% 31% Dividend Yield (%) 3.0% 2.8% 2.8% 3.0%
Depreciation 5 5 6 6 Profitability Ratios
EBIT 269 259 236 253 RoE 41% 44% 43% 44%
Interest 0 1 1 1 RoCE 56% 52% 46% 48%
PBT 297 300 268 286 Turnover Ratios
Tax 54 61 48 52 Asset Turnover (x) 1.5 1.4 1.3 1.4
Tax Rate (%) 18% 21% 18% 18% Debtors (No. of Days) 11 12 11 11
Reported PAT 196 220 220 235 Inventory (No. of Days) 61 22 21 21
Dividend Paid 204 204 204 217 Creditors (No. of Days) 18 18 18 18
No. of Shares 15 15 15 15 Net Debt/Equity (x) 0 0 0 0
FY16 FY17E FY18E FY19E FY16 FY17E FY18E FY19E
Share Capital 15 15 15 15 OP/(Loss) before Tax 297 281 268 286
Reserves 466 482 499 516 Depreciation 5 5 6 6
Net Worth 481 497 513 531 Direct Taxes Paid -53 -61 -48 -52
Long term Debt 0 0 0 0 Oper. Prof. bef. WC change 274 287 275 293
Short term Debt 10 15 15 15 CF from Op. Activity 193 222 232 241
Deferred Tax 1 1 1 1 Capital expenditure -17 -18 -7 -7
Capital Employed 481 497 513 531 CF from Inv. Activity 6 -29 -27 -37
Net Fixed Assets 97 91 92 93 Divd Paid (incl Tax) -204 -204 -204 -217
Capital WIP 1 1 1 1 CF from Fin. Activity -194 -200 -205 -218
Debtors 25 26 23 25 Inc/(Dec) in Cash 5 -7 1 -14
Cash & Bank Balances 58 51 52 37 Add: Opening Balance 4 58 51 52
Trade payables 44 39 39 42 Closing Balance 9 51 52 37
Total Provisions 0 0 0 0
Net Current Assets 340 367 383 399
Total Assets 566 580 595 617
5
BALANCE SHEET CASH FLOW STATEMENT
Please refer to the Disclaimers at the end of this Report
BAJAJCORP
Financials Snap Shot
INCOME STATEMENT RATIOS
Narnolia Securities Ltd