Hello Sir,

Hope you are doing well.

I am sure you might be well aware of Bajaj Almond Drops Hair Oil (ADHO). It’s a leading brand in the light hair oil segment and the company behind the same is Bajaj Consumer.

Bajaj Consumer has a bad track record in terms of wealth creation for the shareholders. However, recently there have been some changes at the top level management. Further, the company has also been working on reducing dependence on ADHO and expanding product pipeline.

The management is also targeting double digit growth in sales for the next few years.

We decided to check out what the management has to say and their guidance for the next 2-3 years. Below, we have shared notes from Q1 FY 24 con-call of the company.

Hope you find the details useful for your own investments or to add the stock to your watch list.


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  • 1 Special situation opportunity – Change in ownership along with already strong profitability and growth can result in re-rating of the company to higher valuations. Further, the stock is consolidating in a tight range and the open offer price caps the downside – Details @ click HERE

  • 1 medium-long term investment recommendation – It’s a sub 3,000 crore market cap company wherein the company might double its profit in the next 3-4 years. Details @ click HERE

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Bajaj Consumer – Insights from Q1 FY 24 con-call of the company

– General

  • Overall hair oil market witnessed a recovery in both value and volume terms after 8 quarters and reported a value growth of 4% and a volume growth of 3% in Q1 on YOY basis
  • The industry registered a growth of 7% in urban markets, as compared to 3.7% in Q4 ’23. Rural markets, which have been depressed, was also flat this time compared to decline of 5.6% witnessed in Q4 FY ’23
  • The company reported a consolidated sales of INR 265.7 crores, resulting in 8% value growth with a slightly higher volume growth on YOY basis
  • The hair oils portfolio of the company grew at 9% in the quarter, and double-digit volume growth
  • Standalone sales grew by 6.5% with a strong double-digit growth in international business
  • On a sequential basis, gross margins improved by 60 basis points, with softening of key raw material costs, mainly RMO

– International business

  • International business has been scaling up well as planned and has registered a healthy growth of 42% over last year and 32% on a sequential basis
  • Robust performances were delivered by Middle East and Africa and the rest of the world regions
  • International business used to be about 2%, 3%. Now it’s gone up to 5%
  • I think that 20%-25%, a little more mid to long term is clearly doable and that is the direction we are taking

– ADHO (almond drops hair oil)

  • ADHO grew by 9% in value terms compared to the same period previous year, and 6% on a sequential basis
  • ADHO contribution around 86% this quarter

– Almond drop extensions

  • AD serum was extended to select modern trade chains in the quarter and traction in this outreach
  • 2 new OT-specific SKUs of almond drop soaps are planned to be launched in Q2
  • The AD extension portfolio has been further expanded with 2 launches that have happened in this month, which is AD nourishing body lotion and AD anti-hair fall shampoo

– New products

  • Consumer offtake and distribution buildup has been scaling up as per plans for coconut portfolio, resulting in market share gains
  • Coconut actually gives us a double-digit EBITDA
  • Amla portfolio grew by 16% on a sequential basis as HSM markets rebounded
  • The company launched its first offering in the personal care non-hair oil category under the Bajaj Ethnic range with the Bajaj 100% pure henna this quarter
  • In Q1, we also launched 2 new variants under the Nomarks brand directed towards blemish removal

– Raw materials

  • The consumption prices for LLP were higher by 16% for the quarter, as compared to the same period last year
  • RMO prices continued to decline on a good harvest crop in mustard and overall correction in global edible prices…RMO is down by about close to 20%
  • On key raw materials, while glass prices were up by 10%, PET prices have decreased by 8%

– Advertisement

  • 16% to 18% (of sales) is what we have guided and that is what we are going to remain in the short term, at least short to midterm and that we will see

– Distribution

  • Modern trade and e-commerce, we are having a saliency about 17%, modern trade being a little higher than e-commerce; between 20% to 22%, is clearly we see happening in the near short term
  • Profitability wise, Modern trade is at times higher than general trade and at times at similar levels with general trade, very rarely going below general trade
  • E-commerce obviously is a little lower, but still decently profitable

– Guidance

  • As far as Non ADHO is concerned, today we are at that 14%-15%; we have called it out, that we’ll look at a 30%
  • We feel that 18% to 20% (EBITDA) this year is doable



Disclaimer: This is not a recommendation to buy/sell Bajaj Consumer. The securities quoted are for illustration only and are not recommendatory.


Best Regards,

Ekansh Mittal
Research Analyst
Web: https://www.katalystwealth.com/


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