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Bajaj Consumer Ltd

Discussion in 'Investment Analysis' started by nirajshah, Aug 4, 2019.

  1. nirajshah

    nirajshah Champion

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    An FMCG company available at cheap valuation. Here are some points I like

    1. Available at 17PE trailing earnings.
    2. ROCE of close to 60%
    3. Dividend yield of above 5%
    4. Very good OPM and NPM

    Few points to consider as well.

    1. Promoter holding is pledged
    2. Low growth in past 5 years
    3. Competing with Marico in hair oil segment. Still have great OPM.

    Your thoughts.

    Sent from my Redmi 6A using DIY Technical Analysis mobile app
     
    nirajshah, Aug 4, 2019
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  2. shabbir

    shabbir Administrator Staff Member

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    I will give it a pass because of high dividend only. Company may not have great plans and so is sharing the dividend with the shareholders. Returning money to the shareholders. The only other reason I see company sharing 90% of the earning as dividend is, company has pledged shares and earnings shared as dividend can be used to unpledge the promoter's shares. Can be considered as good as well.

    Still when the company is in direct competition with Marico, I will give it a pass because of lack of growth. Marico has around 20% as OPM but much better growth than Bajaj consumers.

    Better growth can mean the future PE looks cheaper though it may look costly on the trailing earnings basis. Read https://shabbir.in/eps/
     
    shabbir, Aug 5, 2019
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  3. Suresh_Sinha

    Suresh_Sinha Active Member

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    Very interesting identification. I think I will definitely consider it for accumulation.

    Dividend yield is worth considering.
     
    Suresh_Sinha, Aug 5, 2019
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  4. LShinoy

    LShinoy New Member

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    What are your views on Godrej Consumers?
     
    LShinoy, Aug 5, 2019
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