Bajaj Consumer has recently course corrected to focus all its efforts only in the hair oil space.

There is enough headroom for growth in Rs.80bn hair oil category (ex-coconut oil) and Bajaj Consumer has the right to win in this space with an entrenched brand like Almond Drop Hair Oil (ADHO).

Association with Bain & Co. is a step in this direction where the initial mandate is to find avenues to accelerate growth for ADHO brand.

With ADHO revenue still less than 10% of the overall hair oil category, the brand is well poised to benefit from the macroeconomic spending turnaround and distribution expansion.

With the pilot implementation of new brand strategy in association with Bain consulting in one state yielding positive results so far, pan-India execution of the strategy and foray into other segments within hair oils will be key monitorables in the next 12-18 months.

Promoter pledge shares overhang which has plagued the stock performance in recent months has seen some respite with promoters repaying debt (against which Bajaj Consumer shares are pledged) post 22% stake sale in the company.

Inexpensive valuation [16x FY21E EPS], high FCF yield [~6%] & dividend payout make the stock an interesting consideration at this point.

Disclaimer: The above report is compiled from information available on public platforms. inChat team advises users to check with certified experts before taking any investment decisions.

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