Please Share:: 
Strong positioning in single category…
We recently met the management of Bajaj Corp (BCL) to understand the
company’s long term growth opportunity and the triggers for its future
growth potential in the FMCG (hair and skin care) space. The company is
the leading player in the light hair oil (LHO) category in India with 58.5%
volume and 60% value share (June, 2014). The key brands and offerings
of BCL in LHO segment are Bajaj Almonds Drop Hair Oil, Bajaj Kailash
Parbat Cooling Oil, Bajaj Brahmi Amla/Amla Shikakai Hair Oil and Bajaj
Jasmine Hair Oil. The company generates ~90% of its revenues from
LHO segment and ~10% from other personal care brands in its kitty. BCL
entered the skin care segment in August, 2013 with the acquisition of No
Marks. Led by BCL’s dominance in the LHO segment, its revenues have
grown at a robust CAGR of 22.4% in FY09-14 to | 671.7 crore. The
company has exhibited strong EBITDA margins of 20%+ over the years,
thereby aided its earnings to post growth at 26.2% CAGR (FY09-14).
Shift in consumer preferences aids growth for Bajaj Corp
Though Indian consumers were predominantly coconut hair oil (~| 3400
crore) users, the increasing aspirational demand supported by higher per
capita income has shifted the consumer preference towards light and
perfumed hair oil segment (~| 3900 crore), driving growth for BCL.
According to the company, for every 100 new users for Bajaj, ~40 are
generated via a shift from coconut oil users, 18-20 from other LHO brand
users, 18-20 from unbranded users and the rest from other segments.
Currently, ~59% of Bajaj Almond Drops users lie within the age of 15-39
years with ~54% male users and 46% female users. With LHO being at a
premium price, currently ~65% of sales come from urban India while
35% comes from rural India with North and East India constituting ~70%
of LHO sales. Further, with the hair oil (HO) industry in India still having
~30% of unbranded players, we believe there is still room for growth in
the company’s volumes. To aid its future growth, BCL expanded its LHO
portfolio by launching Kailash Parbat cooling hair oil in the | 875 crore
cooling hair oil segment. It has successfully grown its share from nil in
April, 2011 to 2.4% in June, 2014.
Entry into skincare segment
Bajaj Corp entered the skin care segment in August, 2013 with the
acquisition of No Marks. No Marks has 12% share in the ~| 350 crore
anti-marks skin care segment. The category has been growing at 27% per
annum. Currently, the brand constitutes ~7% of BCL’s revenues (| 14.1
crore in Q1FY15). The company’s aim is to invest aggressively into the
brand and revive the brand’s equity in the next two or three years.
�� India Equity Research Reports, IPO and Stock News Visit http://indiaer.blogspot.com/ for complete details ��
��
-->
Strong positioning in single category…
We recently met the management of Bajaj Corp (BCL) to understand the
company’s long term growth opportunity and the triggers for its future
growth potential in the FMCG (hair and skin care) space. The company is
the leading player in the light hair oil (LHO) category in India with 58.5%
volume and 60% value share (June, 2014). The key brands and offerings
of BCL in LHO segment are Bajaj Almonds Drop Hair Oil, Bajaj Kailash
Parbat Cooling Oil, Bajaj Brahmi Amla/Amla Shikakai Hair Oil and Bajaj
Jasmine Hair Oil. The company generates ~90% of its revenues from
LHO segment and ~10% from other personal care brands in its kitty. BCL
entered the skin care segment in August, 2013 with the acquisition of No
Marks. Led by BCL’s dominance in the LHO segment, its revenues have
grown at a robust CAGR of 22.4% in FY09-14 to | 671.7 crore. The
company has exhibited strong EBITDA margins of 20%+ over the years,
thereby aided its earnings to post growth at 26.2% CAGR (FY09-14).
Shift in consumer preferences aids growth for Bajaj Corp
Though Indian consumers were predominantly coconut hair oil (~| 3400
crore) users, the increasing aspirational demand supported by higher per
capita income has shifted the consumer preference towards light and
perfumed hair oil segment (~| 3900 crore), driving growth for BCL.
According to the company, for every 100 new users for Bajaj, ~40 are
generated via a shift from coconut oil users, 18-20 from other LHO brand
users, 18-20 from unbranded users and the rest from other segments.
Currently, ~59% of Bajaj Almond Drops users lie within the age of 15-39
years with ~54% male users and 46% female users. With LHO being at a
premium price, currently ~65% of sales come from urban India while
35% comes from rural India with North and East India constituting ~70%
of LHO sales. Further, with the hair oil (HO) industry in India still having
~30% of unbranded players, we believe there is still room for growth in
the company’s volumes. To aid its future growth, BCL expanded its LHO
portfolio by launching Kailash Parbat cooling hair oil in the | 875 crore
cooling hair oil segment. It has successfully grown its share from nil in
April, 2011 to 2.4% in June, 2014.
Entry into skincare segment
Bajaj Corp entered the skin care segment in August, 2013 with the
acquisition of No Marks. No Marks has 12% share in the ~| 350 crore
anti-marks skin care segment. The category has been growing at 27% per
annum. Currently, the brand constitutes ~7% of BCL’s revenues (| 14.1
crore in Q1FY15). The company’s aim is to invest aggressively into the
brand and revive the brand’s equity in the next two or three years.
�� India Equity Research Reports, IPO and Stock News Visit http://indiaer.blogspot.com/ for complete details ��
��
LINK:
http://content.icicidirect.com/mailimages/IDirect_BajajCorp_MgmtNote.pdf
No comments:
Post a Comment