Release Date: May 09, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Consolidated sales for FY '24 stood at INR 968 crores with a 2% value growth and 6.6% volume growth.
- Gross margin for FY '24 expanded by 91 basis points to 54.3%, while quarterly gross margin grew by 62 basis points to 54.7%.
- EBITDA for FY '24 increased by 11% to INR 162.6 crores, with margins improving by 151 basis points to 17.1%.
- E-commerce registered a growth of 26% for the quarter and 27% for the full year, supported by expansion into new platforms.
- International business delivered strong growth of 24% in FY '24, with significant contributions from the Middle East, Africa, and Bangladesh.
Negative Points
- Consolidated quarterly sales of INR 234.2 crores were 4.9% lower than the corresponding quarter last year.
- Rural markets saw a lower decline compared to previous quarters but still underperformed overall.
- Primary sales in General Trade (GT) experienced a decline, with secondary sales being higher due to inventory corrections.
- Advertising and promotion spend for the quarter amounted to INR 40.2 crores, which is 17.4% of sales, indicating high marketing costs.
- Employee costs increased by INR 5 crores in Q4 compared to the previous year, impacting overall expenses.
Q & A Highlights
Q: Can you provide some perspective on the rural trend and expectations for the coming quarters?
A: Rural performance was superior to urban for the first time in a long period. Green shoots of demand are visible, especially in northern states. Interventions in rural execution and marketing are showing positive results. We are confident about rural recovery and expect it to contribute significantly in FY '25. (Jaideep Nandi, Managing Director)
Q: What is the rationale behind the INR 156.5 crores buyback, and how will it be funded?
A: The buyback aims to add value to shareholders and improve ROE. It will be funded from our balance sheet, which has INR 620 crores of cash. The promoter will not participate, indicating confidence in the business's growth prospects. (Jaideep Nandi, Managing Director)
Q: Why have other expenses increased while ad spend has reduced?
A: Other expenses increased due to strategic moves like transitioning ISRs to third-party payrolls, reducing attrition, and investments in Bajaj Bangladesh. Ad spend rationalization was due to earlier high investments in new products. (Jaideep Nandi, Managing Director)
Q: What products are potential revenue drivers in rural markets?
A: ADHO, coconut oil, and Amla oil are key drivers. Specific interventions in ADHO and other products are planned to enhance rural penetration. (Jaideep Nandi, Managing Director)
Q: What are the growth prospects for international markets, and which markets are key?
A: Bangladesh and the Middle East are key focus areas, contributing 65% to international business. We plan to increase international revenue to 20% over the next five years through localized products and strategic investments. (Jaideep Nandi, Managing Director)
Q: Can you elaborate on the repositioning and premiumization of ADHO?
A: Repositioning ADHO involves targeting new customers and introducing premium variants. The work is underway, and we expect to see results within the next 3-4 quarters. (Jaideep Nandi, Managing Director)
Q: What is the medium-term margin profile of the company?
A: We aim to maintain margins between 16% to 18%, balancing growth investments and profitability. (Jaideep Nandi, Managing Director)
Q: How do you plan to achieve the 20% international revenue target by FY '29?
A: The strategy includes organic growth through localized products and potential acquisitions. We are focusing on markets like Bangladesh and the Middle East, with stringent guardrails for international acquisitions. (Jaideep Nandi, Managing Director)
Q: What is the expected growth rate for the next 2-3 years?
A: We are targeting double-digit growth, driven by product interventions and market recovery. Volume growth is expected to be higher than value growth. (Jaideep Nandi, Managing Director)
Q: How will the buyback impact the dividend policy?
A: The buyback is part of FY '24 returns to shareholders. The dividend policy remains at 40% to 60% payout, barring exceptional items like M&A or major CapEx. (Jaideep Nandi, Managing Director)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
