Bajaj Consumer Care Concall Notes: Key Takeaways from Q3 FY25

Bajaj Consumer Care Concall Notes – February 2025

Company Performance Overview

Q3 FY25 Results

• Total Sales: The company reported consolidated sales of ₹230.7 crores for Q3 FY25, marking a 2.4% decline compared to last year.
• Nine-Month Performance: Sales for the first nine months of FY25 stood at ₹703 crores, down 4.2% YoY.
• Gross Margin: Q3 FY25 gross margin was 51.8%, a decrease of 150 basis points compared to last year. For the nine-month period, the margin was 53.2%, down 97 basis points.
• EBITDA & Profit: Standalone EBITDA for Q3 FY25 was ₹29.3 crores with a 13% margin, while for nine months, it was ₹102.5 crores with a 15% margin.
• Net Profit: Q3 FY25 profit after tax stood at ₹27.5 crores, while the nine-month profit was ₹98.7 crores.

Challenges Faced

Pressure on Gross Margins

• Coconut Oil Segment: Despite a 5% price increase, lower margins in the coconut oil portfolio impacted overall profitability.
• Copra Price Inflation: Higher input costs from rising copra prices led to a reduction in margins.
• Future Price Adjustments: Additional price hikes are planned to offset cost pressures.

Slower Sales Growth

• Retail Decline: The General Trade (GT) channel experienced a single-digit decline in both Q3 and the nine-month period.
• Urban vs. Rural Demand: While urban sales remain weak, rural demand is gradually improving.

Higher Operational Costs

• Increased Expenses: Rising costs due to Project Aarohan investments and one-time IT infrastructure upgrades.
• Employee Costs: Despite no new hires, salary expenses have grown due to higher percentage fill rates.

Strategic Initiatives

Project Aarohan

• Goal: Enhance distribution and improve market penetration.
• Progress:
  • Significant improvement in Uttar Pradesh (UP) and Madhya Pradesh (MP).
  • 90% of identified changes already implemented.
  • Direct reach expanded from 42.4K to 58.6K outlets in UP and 15K to 24K outlets in MP.
• Next Steps: Future phases will expand coverage to more states over the next year.

Retail Loyalty Program

• Sales Contribution: Now contributes 11% to total sales.
• Growth Trends: Increased by 27% in Q3 and 35% over nine months.

New Developments

Acquisition of Banjara’s

• Deal Details: Bajaj Consumer Care signed an agreement to acquire a 100% stake in Vishal Personal Care Pvt. Ltd. for ₹120 crores.
• Strategic Benefits:
  • Strengthens the company’s presence in South India.
  • Banjara’s has a strong market position, operating with 60% gross margins.
  • Expected to enhance distribution reach and utilize Bajaj’s existing sales network.

Growth in E-commerce and Modern Trade

• E-commerce Performance: Grew by 39% YoY in Q3 and 28% for the nine-month period.
• Modern Trade Expansion: Registered a 10% growth, with select brands increasing market share.

Bajaj Consumer Care Margin Guidance and Future Outlook

Expected Margin Recovery

• EBITDA Margins: Management aims for a 15%-17% EBITDA margin through pricing adjustments and cost control.
• Cost Management: Optimizing procurement and operational efficiency to drive profitability.

Market Outlook

• Budget Expectations: Positive sentiment around potential government policies to boost disposable income and consumer spending.
• Manufacturing Efficiency: Focus on reducing material costs through smart manufacturing techniques.

Bajaj Consumer Care is implementing strategic initiatives to counter margin pressures and declining sales. While challenges remain, ongoing efforts in distribution expansion, pricing corrections, and acquisitions position the company for future growth. The leadership remains optimistic about a recovery, leveraging new opportunities in e-commerce and retail expansion.

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