Bajaj Consumer Care - Likely Improvement In Core Led By Macro Recovery: ICICI Securities

ICICI Securities Report

Bajaj Consumer Care Ltd. core brand Almond Hair Oil has been under pressure due to headwinds of tepid consumer demand and downtrading to cheaper value-added hair oil segments.

With the expectations of improved consumer demand (rural recovery, moderating consumer inflation etc.) and management initiatives (improved value proposition, distribution efficiency, continued ad-spends), we expect improvement in volume growth.

Further, its non ADHO portfolio (~17% salience) is likely to continue its growth trajectory (+26% YoY in FY24) with continued scale-up of coconut portfolio (+36% in FY24) and almond drops extension (+16% YoY in FY24) in hair and skin care categories.

Operating margin is likely to be range bound (~16-18%) with continued investment towards ad-spends and slightly inferior mix of non-ADHO portfolio. At 17 times price earning FY26E, risk-reward is favorable. 'Buy'.

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