Bajaj Consumer Care Q4 Review: Margins Guidance Maintained; Dolat Capital Retains 'Reduce', Cuts Target Price

In Q4 FY25, gross margin contracted by 90bps YoY to 54.9% due to inflationary raw material prices. The company has resorted to two price hikes in Q4 FY25 and additionally taken a pre-teen price hike in April’25 to offset copra inflation. Further, the Ebitda margin contracted by 190 bps due to gross margin dilution and higher investment in the project AAROHAN. The company plans to increase A&P spends to support NPD. Going ahead, the company has maintained its Ebitda margin guidance at 16-18% for the long run. Though the company has taken price hikes in the recent past and there is a raw material deflation. We believe that the Ebitda margin expansion hereon will remain gradual as the operating efficiencies will remain lower due to continued pressure on demand in premium hair oil category.

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Dolat Capital Report

Bajaj Consumer Care Ltd.’s Q4 FY25 revenue was in line with our estimates, growing by 3.2% YoY, driven by modest 3.0% YoY growth in Almond Drop Hair Oil. Growth was broad-based, with positive momentum observed across all pack formats. Sequentially, large packs/small packs grew by 17/27%.

The organized trade posted 30% YoY growth, supported by 22/33% growth in modern trade/E-com. Furthermore, Q-com grew by 60% (contributing 11% of e-com sales) and will continue to be a key focus area. The Almond Drops Body Lotion and Hair Serum range have also gained good traction on E-commerce channels.

Going ahead, Bajaj Consumer will continue to scale up its presence in the E-commerce channel.

Given the miss in Q4 profitability, we have downward revised our FY26/27E EPS estimates by 3.1/1.8%. We expect a gradual recovery in the operating margin with recent price increases and raw material deflation. However, we remain cautious about the premium hair oil category, due to its discretionary nature and increased competitive intensity.

Valuing the stock at 15x FY27E EPS, we arrive at a target price of Rs 181 and maintain our ‘Reduce’ rating.

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