Kaya Ltd: Glowing stock
(BSE Code: 539276) (CMP: Rs.700.9) (FV: Rs.10)
Kaya Ltd, a demerged entity of Marico’s skin care business, is engaged in the specialized skin care and hair care business. It offers customized services and products through 220+ qualified dermatologists and USFDA-approved cosmetic dermatological procedures at its chain of ‘Kaya Clinics’ in India and the Middle East. Kaya Skin Clinics were conceptualized in 2002 by Marico’s founder Harsh Mariwala to address skin-related concerns. Kaya has more than 100 clinics and skin bars in India and around 21 clinics in the Middle East. Its range of products and services covers various areas such as Anti-Ageing, Pigmentation, Acne/Acne Scar Reduction, Laser Permanent Hair Reduction, etc. apart from regular beauty enhancement services.
After Rajiv Nair joined Kaya as the CEO in November 2016, the company went in for a rebranding exercise. It made its products more affordable, launched a web app through which customers can book appointments and also expanded its product portfolio. It incurred a capex of ~Rs.15 crore to revamp its clinics and introduce a range of hair care treatments including spas and transplants. It is focused on laser hair removal treatments, which contributes 30% to its overall revenue. Its rebranding exercise is targeted to change the perception of Kaya from being a pure skin care clinic to a clinic with a wider offering including services and products for body, hair as well as skin. It launched a range of natural products under the brand ‘Derma Naturals’ under which it sells affordable sheet masks. It now plans to launch lip balms and hair care products starting at Rs.125 across e-commerce platforms. Kaya, which is currently a ~Rs.50 crore business, aims to expand its reach and grow rapidly. On the financials front, it finally broke even in Q2FY19, where-after various brokerages and fund houses have evinced interest in the counter as Kaya is the only listed skin company in India. When other companies like VLCC and Nykaa join the bandwagon, this stock could easily get re-rated. An aggressive management with good corporate governance, low equity capital, high promoter stake, strong brand recall and bright industry prospects make this stock look attractive. Investors can buy the stock for a price target of Rs.1000+ within a year.