4
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 [email protected] 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 B BAJ A A J J J J C C C CO O O OR R R RP P P P L L L LT T T TD D D D. Company Update 533229 BSE Co ode de de Th Th he Company’s i sl A L 6 de un e w ar 4 411 490 490 0 19% % NA CM MP P P P GS S ST may be B BA BA B JAJCORP d d d do d minated by u m ma a arket share le m market share w c co c c ming 5-7 yea Target P Pri ri rice ce Pr P evious Target Price Up U side Change from Previous Company Update Market Data 533229 43 38/ 8/34 340 0 6, ,06 065 5 10 105 5 9,18 181 BSE Code T Th he Company’s t th the light hair oi has continuous other hand, BJA af a a ter HINDUNIL from 41% (FY16 NS N E Symbol BAJAJCOR RP P 52 52wk wk R Range H/L Mk Mkt t Ca C pita l l (R (Rs s Cr Cr) ) Av Av A A . Vo Volu lume me(, (,00 000) 0) Ni ift fty y Stock Performance 1M 3M 12M Absolute 13.0 10.0 9.3 Rel.to Nifty 10.1 -1.5 -12.4 T Th T e Company y yi yiel e e e d is approx fl flow w w s to the inv te te er r rm 9,18 81 Stock Performance Share Holding Pattern-% Financials i im mprove furthe 4 4 44%, 43% and payout. BJAJCO 16. Considering amble growth d Rs 490. Pr romoters 66.9 66.9 66 . .9 Pu Publ blic ic 33.1 33.1 33 33.1 .1 Ot Othe hers rs - - - To Tota tal 100.0 100.0 100. 0.0 0 and Planning f ah a a ead. B BA B JAJCORP’s 3QFY17 2QFY17 1QFY17 Pr Promoters 66.9 66.9 66.9 .9 B BAJAJCORP’s contributed mor Company Vs NIFTY s flagship brad Bajaj Almond Drop hair oil has strong presence in Th h he Company’s Strong brand presence and RoE: International business grew by 72% YoY in Q3FY17 and te e rm. B B BAJAJCORP’s Robust plan for Exports: 11th April. the game changer for the well established FMCG players. GS S ST may be GST, a game changer: is giving dividend regularly and at the present price its dividend T The Company Healthy Dividend Yield Gives holding comfort: s ROE is improving for Last three year and we expect it to B BAJAJCORP’s Outlook 80 85 90 95 100 105 110 115 120 125 BAJAJCORP NIFTY

BUY BAJAJ CORP LTD. - narnolia.com UPDATE_1… · Tel, Bajaj Almond Drops Hair Oil, Bajaj Brahmi Amla Hair Oil, Bajaj Jasmine Hair Oil, Bajaj Nomark Oily Skin Face Wash,

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Page 1: BUY BAJAJ CORP LTD. - narnolia.com UPDATE_1… · Tel, Bajaj Almond Drops Hair Oil, Bajaj Brahmi Amla Hair Oil, Bajaj Jasmine Hair Oil, Bajaj Nomark Oily Skin Face Wash,

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

[email protected]

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

Page 2: BUY BAJAJ CORP LTD. - narnolia.com UPDATE_1… · Tel, Bajaj Almond Drops Hair Oil, Bajaj Brahmi Amla Hair Oil, Bajaj Jasmine Hair Oil, Bajaj Nomark Oily Skin Face Wash,

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

Page 3: BUY BAJAJ CORP LTD. - narnolia.com UPDATE_1… · Tel, Bajaj Almond Drops Hair Oil, Bajaj Brahmi Amla Hair Oil, Bajaj Jasmine Hair Oil, Bajaj Nomark Oily Skin Face Wash,

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)

Page 4: BUY BAJAJ CORP LTD. - narnolia.com UPDATE_1… · Tel, Bajaj Almond Drops Hair Oil, Bajaj Brahmi Amla Hair Oil, Bajaj Jasmine Hair Oil, Bajaj Nomark Oily Skin Face Wash,

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