Bajaj Consumer Care (BAJAJCON) Shares Drop by 8% After Weak Q4 Results, Announces 57.41 Lakh Share Buyback

Bajaj Consumer Care shares plummeted by 8% on May 9, following the announcement of a 12% decline in consolidated net profit for the quarter ending in March. As of 1:15 pm IST, the shares were trading at ₹241.75 on the NSE, reflecting a 7.1% decrease from the closing price of the previous session.

Bajaj Consumer Care experienced a downturn in performance for the quarter ending March 2024, evidenced by declines in Profit Before Tax (PBT) and Profit Before Depreciation, Interest, and Tax (PBDIT). The company also saw reductions in operating profit margin and Earnings Per Share (EPS). Although there was an increase in non-operating income, experts are cautioning about its sustainability. Investors are currently advised to maintain their holdings and closely monitor the company’s future performance for further indications of its financial health.

The small-cap FMCG company, Bajaj Consumer Care, reported a net profit of ₹35.58 crore for the quarter, a decrease from ₹40.46 crore in the same quarter of the previous year. The total revenue for the quarter also dropped by 3.8% year-on-year to ₹239.96 crore, down from ₹249.42 crore in the March quarter of FY23. However, for the full financial year, the company's profit after tax (PAT) showed an 11% increase, rising to ₹155.43 crore from ₹139.21 crore in the previous year.

Bajaj Consumer Care experienced flat volume growth in the fourth quarter of FY24, but recorded a 6.2% increase for the full fiscal year. Specifically, the company's Almond Drops Hair Oil (ADHO) segment saw a modest volume growth of 0.9% for FY24.

On May 8, the board of directors of Bajaj Consumer Care approved a plan to buy back 57.41 lakh fully paid-up equity shares at a price of ₹290 per share, as per a filing with the stock exchange. The total expenditure for this buyback is projected to be ₹166.49 crore. This buyback represents 4.02% of the total paid-up equity capital of the company.

Bajaj Consumer Care announced that the buyback of shares will be executed through a tender offer route on a proportionate basis, utilizing the mechanism for share acquisition via the stock exchange. The company stated that this buyback offer, priced at ₹290 per share, represents an 11% premium over the closing price of ₹261.40 on the NSE as of May 8.

Bajaj Consumer Care stated, "The buyback offer size represents 19.25% and 20% of the aggregate of the company's fully paid-up equity capital and free reserves, according to the latest standalone and consolidated audited financial statements, respectively, for the financial year ended March 31, 2024. This is less than 25% of the aggregate of the total paid-up capital and free reserves." This information clarifies the financial scope and regulatory compliance of the buyback within the stipulated limits.

Bajaj Consumer Care has experienced a notable rise in its non-operating income, which has reached its peak over the last five quarters at ₹11.68 crore. Despite this increase, experts caution that such gains may not be sustainable over the long term. Consequently, investors are advised to retain their holdings and closely track the company’s performance in the upcoming quarters to make informed decisions.