Bajaj Consumer Care shares fall 10% despite strong Q1 results; analyst downgrades rating
AI Summary
Bajaj Consumer Care shares fell 10.74% to ₹589.50 despite reporting strong Q1 earnings, with net sales up 28.3% year-on-year and profit after tax rising 84.8%. The decline follows a downgrade from Choice Institutional Equities, which changed its rating from BUY to ADD due to the stock's significant appreciation and concerns over future margin pressures from rising raw material costs. Analysts expect limited upside potential given the recent price surge and management's cautious guidance for Q2.
Shares of Bajaj Consumer Care were trading sharply lower on Tuesday morning, down 10.74 per cent at ₹589.50 as of 10.42 AM, a day after the company reported its strongest quarterly earnings in recent memory. The stock hit a low of ₹583 against a previous close of ₹660.45, with over 25 lakh shares changing hands and a traded value of ₹153.54 crore. The stock had hit its 52-week high of ₹692 just the previous day.
The sell-off came despite the company reporting consolidated net sales of ₹341.4 crore for Q1 FY27, up 28.3 per cent year-on-year, with EBITDA more than doubling to ₹84.4 crore and profit after tax rising 84.8 per cent to ₹70.7 crore. Gross margins expanded to 61.8 per cent from 56.7 per cent in the year-ago period.
The market reaction appears driven in part by a rating downgrade from Choice Institutional Equities, which revised its call on the stock from BUY to ADD, citing the sharp appreciation in the stock price, up roughly 88 per cent since April 2026 and 25 per cent since its initiating coverage in May. The brokerage raised its target price marginally to ₹715 from ₹690, implying a 9 per cent upside from Monday’s close, which the analyst considered limited given the run-up.
The brokerage noted that while Q1 results beat estimates, EBITDA came in at ₹834 million versus its estimate of ₹743 million, management guided that Q2 gross margins would remain under pressure due to elevated raw material costs, particularly light liquid paraffin, which surged over 40 per cent in Q1. Recovery is expected only in Q3 and Q4.
The flagship Almond Drops Hair Oil brand delivered early-teen volume growth in the quarter, with sachets and smaller packs leading the charge. Management reiterated guidance to grow the non-ADHO portfolio at a high-20 per cent rate over the long term.
Original Article
Published on Hindu BusinessLine