Choice Institutional Equities issued a buy rating for Bajaj Consumer Care with a target price of Rs 715. The firm said strong momentum in the Almond Drop Hair Oil portfolio drove results. To manage volatile raw material costs, the company plans a 5% price hike during the third quarter of FY27.
Choice Institutional Equities's report on Bajaj Consumer Care Q2FY27 result is ahead of expectation; led by continued strong momentum in Almond Drop Hair Oil (ADHO) portfolio (volume growth est. 11-12%) driven by strong growth in LUPs (~20% of the portfolio) and distribution expansion. EBITDA margin, despite decline in gross margin, was above expectations, owing to cost saving initiatives and operating leverage. Key Management Guidance: Raw material price remained volatile and is at an elevated level at present. To mitigate the impact, BAJAJCON plans to implement another round of price hike in Q3FY27, amounting to ~5% at the consumer price level, comprising a 2-3% price increase and the remainder through grammage reduction. The company has also shifted to a short and lean raw material procurement strategy. Additionally, it plans to further rationalise non-media spends and implement other cost saving initiatives to protect EBITDA margin. The management has maintained its high teen revenue growth outlook for FY27 and reiterated its long term EBITDA margin guidance in the low-to-mid-20% range. Outlook We have maintained our BUY rating and one-year DCF-based TP of INR 715, implying an upside of 51% from the CMP (implied P/E of 29.4x Sep-28E EPS and PEG of 2.2). For all recommendations report, click here Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions. Bajaj Consumer Care - 1510026 - choice