Bajaj Consumer Care Limited: Q3 & 9M FY25 Earnings Call

February 14, 2025 · 3 min read

Earnings Call Transcript Analysis Report #

Consolidated Sales: Q3 FY25: INR 230.7 crores (down 2.4% YoY); 9M FY25: INR 703 crores (down 4.2% YoY).
Gross Margin (Standalone): Q3 FY25: 51.8% (down 150 bps YoY); 9M FY25: 53.2% (down 97 bps).
EBITDA (Standalone): Q3 FY25: INR 29.3 crores (margin of 13%); 9M FY25: INR 102.5 crores (margin of 15%).
Profit After Tax (Standalone): Q3 FY25: INR 27.5 crores; 9M FY25: INR 98.7 crores.
Gross margin contraction due to lower margins in coconut oil and higher saliency of coconut oil. Subsequent price increases were taken in the coconut oil portfolio to mitigate cost inflation.

Project Aarohan: RTM revamp project operational across UP and MP. Expansion of direct reach in UP from 42.4K to 58.6K outlets and in MP from 15K to 24K outlets. Phase-2 to cover major states in India over the next four quarters.
Distribution Network: Streamlining distribution network by optimizing VAN network and converting high throughput VANs into direct coverage through sub-stockage. Automated distributor appointment and separation process.
Organized Trade Business: Registered growth of 22% YoY in Q3 and 14% for 9M FY25.
E-commerce Channel: Growth of 39% in Q3 YoY and 28% in 9M FY25. Quick commerce grew by 72% YoY.
International Business: Growth of 23% in Q3 and 19% for 9M FY25 YoY. Bangladesh doubled its top line in Q3 YoY.
New Acquisition: Signed a share purchase agreement to acquire 100% stake in Vishal Personal Care Private Limited (Banjara’s). The purchase consideration is estimated at INR 120 crores at a pre-money enterprise value of INR 108 crores. 49% stake in the first tranche, balance 51% to be acquired in the coming 3-4 months.

Urban demand remains sluggish, but rural demand has been showing some improvement.
The natural BPC products market makes up about 40% of the total BPC market and is growing 1.5x faster than the overall market.

Focus on rural development with enhanced agriculture productivity is expected to improve rural income.
Planned graded price increases in ADHO in the coming quarters to improve margins.
Expectation that the tax relief for the middle class will increase disposable incomes leading to higher consumer spending.

Analysts questioned the company’s ability to achieve high single-digit to double-digit growth in the near term.
Analysts questioned the timeline to achieve the 15% to 17% margin. Management stated that it was an aberration in the quarter and structural corrections have been made.

Management expressed optimism about the Banjara’s acquisition and its potential to expand distribution and unlock growth.
Management acknowledged the challenges in the value-added hair oil category but expressed confidence in corrective measures and a potential demand cycle reversal.

←

→