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Bajaj Consumer Q2 Review - Longer-Than-Expected Turnaround; Weak Revenue With Weaker Margins: ICICI Securities

Bajaj Consumer Q2 Review - Longer-Than-Expected Turnaround; Weak Revenue With Weaker Margins: ICICI Securities

<div class="paragraphs"><p>Bajaj Almond Drops bottles in a production line manufactured by Bajaj Consumer Care Ltd. (Source: Company website)</p></div>
Bajaj Almond Drops bottles in a production line manufactured by Bajaj Consumer Care Ltd. (Source: Company website)

BQ Blue’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages, asset managers and research agencies. These reports offer BloombergQuint’s subscribers an opportunity to expand their understanding of companies, sectors and the economy.

ICICI Securities Report

Bajaj Consumer Care Ltd.'s Q2 revenue declined 2.1% YoY (hair oil) – (Q2) revenues have been in the range of Rs 2-2.2 billion for the last five years.

The more concerning part is that (near flattish) revenue run-rate is at less than 60% gross margins (versus 66-67% normalised level) – due to inflationary raw material and product mix.

Bajaj Consumer Care highlighted:

  1. significant slowdown in rural,

  2. weak wholesale and

  3. good recovery in modern trade and increasing salience of e-commerce (4% of overall business).

While the building blocks of expanding in popular hair categories of Amla and coconut and developing a premium brand are steps in the right direction, there appear challenges in (overall) execution.

We like it's focus on investing in both brand building and distribution expansion.

Click on the attachment to read the full report:

ICICI Securities Bajaj Consumer Q2FY22 Results Update.pdf

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