Showing posts with label HUL. Show all posts
Showing posts with label HUL. Show all posts

Wednesday, July 28, 2010

IPO ANALYSIS: BAJAJ CORP LIMITED - TRUST WORTHY- INVEST.




The Shishir Bajaj group company is entering the capital market on 02-08-10 with public issue of 45,00,000 equity shares of Rs 5/- each in the price band of Rs 630-690. The issue will close on 05-08-10. Kotak Mahindra Capital Company Limited are the sole BRLM.


The ‘Bajaj’ brand has more than five decades of history and has been associated with product categories like two-wheelers, FMCG, financial services and other consumer products. It enjoys a strong brand recall both in the rural and urban markets. The demerger of the Bajaj Group continues to allow all the involved parties to use the ‘Bajaj’ brand.


Bajaj Corp primarily operates in only one business line - hair oils. Oral care forms a very small part of the overall business. The oldest brand is Bajaj Brahmi Amla, in existence since 1953. The other brands include Bajaj Amla Shikakai, Bajaj Jasmine Hair Oil and Bajaj Kala Dant Manjan. Bajaj Corp is the third largest producer of hair oils and the largest producer of light hair oils.

Bajaj Corp derives majority of its revenues from a single product, Bajaj Almond Drops. It is value-added light hair oil and commands a premium. Bajaj Almond Drops is the market leader in the light hair oil segment with a 50% market share.


OBJECTS OF THE ISSUE:

The company intends to utilize the funds for product promotion, acquisition and for general corporate purposes.

FINANCIALS:

In 9MFY10, the company’s net revenues were Rs 2.08.cr and PAT margin was at 27.2%.

PRODUCTS:

Bajaj Corp manufactures and markets five major brands. The flagship brand, Bajaj Almond Drops, is the market leader in the light hair oil segment with 50% market share. Other product includes Bajaj Brahmi Amla, Bajaj Amla Shikakai and Bajaj Jasmine Hair Oil and oral care products under the brand name Bajaj Kala Dant Manjan.

STRENGTHS:

• Market leader in light hair oil segment with 50% market share.
• Strong brand equity - known for reliability, quality and competitive price.
• Established distribution net work.
• Experienced, efficient and professional management.
• IPO grade - 4 by CRISIL.
 

RISKS:

• The company depends heavily on ‘Almond Drops’. Almond Drops hair oil contributed 92.0% and 92.7% of the total sales and gross profit, respectively, for the nine month period ended Dec -09.
• The company operates in a highly competitive FMCG market.


VALUATION AND RECOMMENDATIONS.

The EPS for the FY10 is Rs 33.57. At the higher end of the price band, the P/E is around 20 times. Compares favorably with other established FMCG players like Colgate (30 PE), Dabur India (38 PE) and Hindustan Unilever (27 PE). A sure winner from the Bajaj stable. There is every thing in the company that an investor looking for. Grab it. IPO investment opportunity of the year. INVEST