- Stand-alone Sales: INR236.9 crores for Q1 FY25.
- Sequential Value Growth: 3%.
- Sequential Volume Growth: 2.7%.
- Year-on-Year Value Decline: 8.8%.
- Year-on-Year Volume Decline: 6.7%.
- 4-Year CAGR: 5.5%.
- 3-Year CAGR: 4%.
- Gross Margin: 55.2% for Q1 FY25.
- EBITDA: INR38.4 crores with a margin of 16.2% of sales.
- PAT: INR38 crores with a margin of 16% of sales.
- Wholesale Channel Broad Basing: Increased by more than 800 wholesalers (13% of the wholesale base).
- Retail Outlets: Reached about 12,000 outlets in Q1.
- Organized Trade Growth: 12% year-on-year and 15% quarter-on-quarter.
- Modern Trade B2C Growth: 9% year-on-year.
- B2B Business in Modern Trade Growth: 56% aided by opening of 150 stores under Metro Cash & Carry.
- E-commerce B2C Growth: 27% year-on-year.
- Quick Commerce Channels Growth: 83% year-on-year.
- International Business Growth: 28% quarter-on-quarter.
- Rest of World Exports Growth: 43% year-on-year and 55% quarter-on-quarter.
- Nepal Growth: 76% year-on-year and 20% quarter-on-quarter.
- Middle East and Africa Growth: 45% quarter-on-quarter.
- Non-ADHO Portfolio Contribution: 18% of total contribution in Q1 FY25, growing by 17% year-on-year.
- A&P Spends: INR37.2 crores, about 16% of sales.
- Cost Savings: Nearly INR1.5 crores in the quarter.
- Productivity Boost: 6% in Guwahati and 12% in Paonta compared to Q1 FY24.
Release Date: August 09, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Gross margin for Q1 FY25 expanded to 55.2%, showing improvement both sequentially and year-on-year.
- EBITDA for Q1 FY25 stood at INR38.4 crores with a margin of 16.2% of sales.
- The company implemented a planned onetime correction in the wholesale channel, improving market hygiene and stabilizing rates.
- Retail loyalty programs have reached about 12,000 outlets, showing steady performance in retail and rural markets.
- International business registered a growth of 28% quarter-on-quarter, with strong performance in key markets like Malaysia, USA, and Canada.
Negative Points
- Year-on-year, the company saw a decline in value and volume by 8.8% and 6.7%, respectively, due to a high base from Q1 last year.
- The planned hygiene correction in the wholesale channel resulted in a temporary sales impact.
- ADHO performance was affected by the planned hygiene correction, particularly in sachet and mid packs.
- The company faces competitive intensity, particularly from one competitor offering significantly lower prices.
- Despite significant advertising spend, the top-line growth has not reflected the investment, indicating potential inefficiencies in marketing spend.
Q & A Highlights
Q: What is the current breakup of ADHO and non-ADHO product split in terms of revenue?
A: The non-ADHO portfolio has grown from 5% four years ago to 18% in Q1 FY25. The company is on track to reach a 40% non-ADHO contribution in the next four to five years. - Jaideep Nandi, Managing Director
Q: What are the top line growth expectations for the company in the next two to three years?
A: The company aims for mid- to high single-digit growth for the current year, with a long-term goal of sustaining close to double-digit CAGR. This will be driven by new products and international market expansion. - Jaideep Nandi, Managing Director
Q: Are there any margin expansion plans as the company grows its revenue?
A: The company aims to maintain EBITDA margins between 16% to 18%. New products under the Almond Drop extensions will have margins close to ADHO. Initial advertising might slightly deplete margins, but overall, they will be managed within the stated range. - Jaideep Nandi, Managing Director
Q: Will Bajaj Consumer Care remain a debt-free company?
A: Currently, the company is not leveraged and has undertaken a buyback to improve return on capital and equity. However, if a suitable acquisition opportunity arises, the company may consider leveraging. - Jaideep Nandi, Managing Director
Q: What was the volume growth at the retail level aside from the wholesale correction?
A: Retail and rural volumes were just about positive, tracking marginal growth on a quarter-on-quarter basis. - Jaideep Nandi, Managing Director
Q: How is Q-commerce scaling up for Bajaj Consumer Care?
A: Q-commerce grew by 83% year-on-year and remains a focus area. The company is well-structured in terms of assortment with partners like Zepto, Blinkit, and Flipkart. - Jaideep Nandi, Managing Director
Q: What is the share of sales from e-commerce?
A: E-commerce contributes about 10% to the overall sales, with modern trade at 11% and CSD plus institutions at 5%, making organized trade 26% of total sales. - Jaideep Nandi, Managing Director
Q: Can you explain the recent inventory readjustment at the GT level?
A: The correction was aimed at ensuring rate stability by reducing the advantage larger wholesalers had over smaller ones. This structural correction was necessary for long-term market hygiene. - Jaideep Nandi, Managing Director
Q: What are the company's priorities for the next three to four years?
A: The focus will be on building a diversified portfolio of brands, supporting them, and driving innovation. The company aims to achieve sustainable top-line growth while maintaining strong processes and systems. - Jaideep Nandi, Managing Director
Q: How will the company manage its ad spend going forward?
A: The company plans to maintain ad spend at 16% to 18% of sales, introducing new products in a phased manner to ensure sustainable growth. - Jaideep Nandi, Managing Director
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
