Bajaj Consumer Q2 Review- Weak Core A Drag; Demand Recovery Essential For Growth Aspirations: ICICI Securities

ICICI Securities Report

Bajaj Consumer Care Ltd. had another disappointing print with 1% YoY revenue decline (~2% YoY volume decline) due to continued stress in wholesale channel for core Almond Drop Hair Oil (~80% revenue salience). Diversification journey continues, though at a moderated pace with 11% YoY growth in non-ADHO portfolio (~20% salience) led by continued scale-up of coconut hair oil (double-digit growth) and ADHO extensions.

Plans to expand urban direct distribution and village reach by 40% and 10% augur well for revival of growth in ADHO portfolio, if executed well and demand environment improves.

Management targets double-digit growth in medium term. Operating margin was under pressure due to commodity inflation (expects it to be in the range of 16-18%). Bajaj Consumer has taken multiple initiatives to strengthen ADHO, though results are yet to be seen.

Diversification of product portfolio are steps in the right direction. It's now a “show me” story. Buy.

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