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Consumer products
India
Coconut oil price increases aid growth in value-added oil; positive for Dabur. The
biggest beneficiary of the narrowing of retail price gap between coconut and other subsegments
has been amla hair oil (Dabur Amla) and light hair oil (Bajaj Almond Drops).
The increase in copra price has forced Marico to effect a 32% price increase in its
Parachute portfolio (the key 100 ml pack rises to Rs25 from Rs21). Dabur Amla
accounts for ~10% of Dabur’s sales and ~25% of EBITDA—we see any
disproportionate growth in this segment contributing to higher portfolio profitability.
Takeaways from meeting with Bajaj Corp
Industry growth. In 9MFY11, the total hair oil market growth has slowed down to 6.5% from
8.5%. In case of the light hair oil market, the growth slowed down to ~7.5% in 1HFY11 but
increased to 11.5% in 3QFY11. Amla market growth was 14% in 3QFY11.
Competition. Marico launched Nihar Badam hair oil and Vasmol launched Rootz in FY2011.
However, both the brands are not progressing well. Nihar gained 0.6% market share in the
past 6 months while Vasmol gained ~0.1% share. Keo Karpin’s share has dropped to 18%
from 20% in the beginning of the fiscal.
The biggest beneficiary of the narrowing of MRP between coconut and other sub segments
has been amla hair oil (Dabur Amla) and light hair oil (Bajaj Almond Drops). The increase in
copra price has forced Marico to effect a 32% price increase in the Parachute portfolio
(including the key 100 ml pack to Rs25 from Rs21).
Dabur and Bajaj Corp have maintained the retail price for the past 9 months, and
price stability is likely aiding volume growth. Bajaj Corp attributes poor volume growth in
1HFY11 to the two successive price hikes that it took in January and May 2010 and is
hence planning to take the next price hike in April 2011. Dabur, which effected ~5%
price increase in Amla in April 2010, has likely seen a similar trend (initial dip in volumes
and a pick-up after two quarters).
Raw material. Light liquid paraffin oil (LLPO) price has moved to Rs79/kg in January 2011
from Rs44/kg in March 2010. LLPO is ~one-third of COGS for value-added hair oil.
Retain ADD on Dabur (Rs98, TP Rs110) and Marico (Rs125, TP Rs140). We see upside
risks to our Dabur estimates than Marico.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Consumer products
India
Coconut oil price increases aid growth in value-added oil; positive for Dabur. The
biggest beneficiary of the narrowing of retail price gap between coconut and other subsegments
has been amla hair oil (Dabur Amla) and light hair oil (Bajaj Almond Drops).
The increase in copra price has forced Marico to effect a 32% price increase in its
Parachute portfolio (the key 100 ml pack rises to Rs25 from Rs21). Dabur Amla
accounts for ~10% of Dabur’s sales and ~25% of EBITDA—we see any
disproportionate growth in this segment contributing to higher portfolio profitability.
Takeaways from meeting with Bajaj Corp
Industry growth. In 9MFY11, the total hair oil market growth has slowed down to 6.5% from
8.5%. In case of the light hair oil market, the growth slowed down to ~7.5% in 1HFY11 but
increased to 11.5% in 3QFY11. Amla market growth was 14% in 3QFY11.
Competition. Marico launched Nihar Badam hair oil and Vasmol launched Rootz in FY2011.
However, both the brands are not progressing well. Nihar gained 0.6% market share in the
past 6 months while Vasmol gained ~0.1% share. Keo Karpin’s share has dropped to 18%
from 20% in the beginning of the fiscal.
The biggest beneficiary of the narrowing of MRP between coconut and other sub segments
has been amla hair oil (Dabur Amla) and light hair oil (Bajaj Almond Drops). The increase in
copra price has forced Marico to effect a 32% price increase in the Parachute portfolio
(including the key 100 ml pack to Rs25 from Rs21).
Dabur and Bajaj Corp have maintained the retail price for the past 9 months, and
price stability is likely aiding volume growth. Bajaj Corp attributes poor volume growth in
1HFY11 to the two successive price hikes that it took in January and May 2010 and is
hence planning to take the next price hike in April 2011. Dabur, which effected ~5%
price increase in Amla in April 2010, has likely seen a similar trend (initial dip in volumes
and a pick-up after two quarters).
Raw material. Light liquid paraffin oil (LLPO) price has moved to Rs79/kg in January 2011
from Rs44/kg in March 2010. LLPO is ~one-third of COGS for value-added hair oil.
Retain ADD on Dabur (Rs98, TP Rs110) and Marico (Rs125, TP Rs140). We see upside
risks to our Dabur estimates than Marico.
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