Bajaj Consumer up 5% as board to consider share buyback proposal on Friday

Shares of Bajaj Consumer Care gained 5 per cent and hit an intra-day high of Rs 184.65 on the BSE on Tuesday after the personal care products’ company announced that it’s board will meet on Friday, December 9, to consider share buyback proposal.

Trading volumes on the counter jumped over three-fold with a combined 3.6 million shares changing hands on the NSE and BSE till 12:46 PM. In comparison, the S&P BSE Sensex was down 0.60 per cent at 62,472.

“The board of directors of the company will consider a proposal for buyback of fully paid-up equity shares of the company at its meeting to be held on Friday, December 9, 2022,” Bajaj Consumer said in an exchange filing.

The primary objective of the share buyback programme is to arrest the fall in stock’s value by reducing the supply, which will eventually push up the share price through a better price to earnings (P/E) multiple.

The stock of Bajaj Consumer Care has outperformed the market in the recent past. In the past one week, it has rallied 10 per cent, as against 0.34 per cent decline in the S&P BSE Sensex. Meanwhile, in the past one and six months, it has gained 15 per cent and 30 per cent, respectively. In comparison, the benchmark index was up 2.5 per cent and 12 per cent, respectively, during the same period.

However, over the past one year, Bajaj Consumer Care has underperformed with a decline of 0.25 per cent as against 10 per cent rally in the Sensex.

In first half (April to September) of the current financial year 2022-23 (H1FY23), Bajaj Consumer posted a 31.9 per cent year-on-year (YoY) fall in its profit after tax at Rs 31.70 crore on single digit growth in sales. The company’s revenue grew 7.7 per cent YoY to Rs 230 crore. Earnings before interest, taxes, depreciation and amortization (Ebitda) margins contracted substantially to 13.9 per cent from 23.2 per cent in H1FY22.

Bajaj Consumer said that hair oil market saw muted volumes in Q2FY23 over same period last year. “The slow-down in consumption experienced due to inflationary headwinds. The decline in demand far sharper in Rural as compared to Urban,” the company said. in its earnings presentation.