Bajaj Consumer Care Limited Q1FY22 Result Analysis and Conference Call Highlights

Q1FY22 Result Analysis:

1) Q1FY22 Result

• Bajaj Consumer Care has reported a muted growth in its revenue of 10.6% YoY from Rs. 197 Cr. in Q1FY21 to Rs. 217 Cr. in Q1FY22. While sequentially, the revenue of the company has fallen by around 12.8% from Rs. 249 Cr. in Q4FY21.
• The Earnings before Interest, Tax, Depreciation, and Amortisation (EBITDA) of the company has also gone down to Rs. 52 Cr. in Q1FY22 from Rs. 57 Cr. in Q1FY21, down by 8% YoY. Quarter on Quarter, the figure has decreased by 15% from Rs. 62 Cr. in Q4FY21.
• The EBITDA margin of the company has also contracted by 490 bps YoY and 60 bps QoQ to 24.6% in Q1FY22.
• The Profit Before Tax (PBT) of the company has decreased by 9.8% YoY from Rs. 66 Cr. in Q1FY21 to Rs. 59 Cr. in Q1FY22. Sequentially, the PBT of the company has decreased by 10.4% from Rs. 66 Cr. in Q4FY21.
• The Net Profit of the Company is Rs. 49 Cr. in Q1FY22 against Rs. 54 Cr. in Q1FY21 amounting to de-growth of 9.8% YoY. The Net Profit of the company was Rs. 55 Cr. in Q4FY21, which is down by 10.6% QoQ.
• The Net Profit Margin of the company stood at 22.6% in Q1FY22 down by 480 bps YoY and up by 60 bps QoQ.

Bajaj Consumer- Q1FY22 Result

3) Brand Performance:

i) Bajaj Amla Aloe Vera Hair Oil:

• Market Share Progression on AAHO has been steady despite Lockdown in Key Geographies of Rajasthan, UP, and MP which impacted van sales in Rural Markets.

ii) Bajaj Pure Coconut Oil:

• Launched 100% Pure Coconut Oil, Highest Grade without any additives.
• Launched in the pack of 100ml, 175ml, and 500ml.
• Coconut Oil is an Rs. 4,800 Cr. category (MAT-May 2021) largely concentrated in the West, South, and East.

iii) Bajaj Almond Drops Hair Oil:

• Bajaj ADHO market share is up by 110 bps.
• Share increase has been driven by consistent investment in both brand building and Distribution across both Urban and Rural Markets.

4) Business Highlights:

i) Q1FY22 Highlights:

• Sales were impacted in April and May due to Covid-19 related lockdown.
• Gross Margin was at 58.7% impacted due to commodity price inflation and change in product mix.
• With effect from 31^st August 2021, Chandresh Chhaya has resigned as Company Secretary and Compliance Officer of the company.
• Light Liquid Paraffin (LLP) and Refined Mustard Oil (RMO) continue to witness an upward trend.

ii) Domestic Business:

• Retail Initiative in focused markets yielded success resulting in over 40% growth in retail.
• Van Operations got back to pro lockdown levels and going into Q2, it will be further scaled up to beyond the Q4 levels of last year.
• Urban has shown signs of recovery clocking a good growth in Q1 with retail being a growth driver, large wholesale markets were the draggers due to closure during the lockdowns.
• Retail Activation in Urban Markets.
• Strong Brand Presence in the e-commerce platform.

iii) International Business:

• Progressive Upward trend in Sales during the Quarter in Nepal and Bangladesh.
• Gulf Cooperation Council (GCC) reported lower sales due to travel restrictions.
• Robust growth of 102% across key geographies over low base last year.

Earnings Call Highlights:

Business Highlights:

• April and May month of 2021 was badly impacted due to lockdowns in concern with the second wave of Covid-19 in the country. With an easing down of restrictions, June saw a good recovery trend for the company. Also, June 2021 was the highest sales month for the company.
• The Value growth of the business excluding Sanitisers was 20.4% in the June Quarter of the year 2021.
• Input prices continue to witness inflation.
• The company has taken a price increase of around 2.5% to settle off with the inflation.
• The company will take further action regarding the price action according to the commodity inflation trend.
• Rural Growth continues to witness strong growth momentum, while urban growth has improved sequentially.
• The Central Regions of the country like MP, CG, Rajasthan reported negative growth of the company and hence impacted the business too.

Bajaj Pure Coconut Oil:

• To expand the brand portfolio, the company has launched Bajaj Pure Coconut Oil. Launched in July in some selective states.
• The company eyes for gaining market share in the Coconut Oil Category in the market.
• Here, the company strategically eyes for the West and South Market.
• This will also mark the entry step of the company in the South Market Operations.
• The company believes that this brand will run majorly on the Brand Name of Bajaj.
• The company is offering differentiated pricing for this product as compared to peers in the category.

D2C:

• The Company will wait for few quarters in respect of D2C Business.
• The Company is awaiting for preparation of a brand portfolio for the D2C business.

Brands Diversification:

• Bajaj Almond Brand is the cash cow of the business.
• The company believes that this brand should be supported with some other side brands like Bajaj Amla, and now Bajaj Pure Coconut Oil.
• The newly launched Bajaj Pure Coconut Oil may burn the EBITDA Margin/Gross Margins of the company for a few coming periods. But the company is well aware of this and will try to keep the margin levels intact.

Business Outlook:

• The management of the company believes e-Commerce and International Business will be key performance drivers for the company in the future.
• The management is strategically planning for ramping up International Business.