Bajaj Consumer Care Ltd.'s net profit for the second quarter declined amid a consumption slowdown, particularly in rural India, and high cost inventory.
The consolidated net profit of the maker of Almond Drops hair oil fell 32% over the previous quarter to Rs 31.65 crore in the quarter ended September, according to the company's exchange filing.
Bajaj Consumer Q2 FY23 Highlights (YoY)
Revenue rose 8% to Rs 232.45 crore.
Ebitda declined 36% to Rs 30.64 crore.
Ebitda margin narrowed to 13.2% against 22.2% on higher expenses.
Expenses rose 20% to Rs 204 crore.
Consumer goods makers have been reeling under inflationary pressure due to lingering pandemic-led supply crunches and a spike in raw material costs fueled by the Russia-Ukraine crisis.
During the quarter, the company saw value growth of 7%, while volume growth remained tepid.
Prices continue to increase on account of the increase in crude oil prices, the depreciation of the INR against the USD, and tightness in refining capacities. However, mustard oil prices have started correcting on account of reductions in other edible oils like palm and soya.
"Removal of export duty on palm along with slowing demand globally has resulted in lowering mustard prices," the company said.
The drag on Bajaj's sales comes at a time when the country's hair oil market has seen a 5.7% decline in volumes and a 5.5% fall in value growth. The decline in demand was far sharper in rural areas at 8.9%, as compared to urban areas at 2.7%.
According to its investor presentation, within channels, the company has seen a slight decline in sales in general trade, mainly due to the rural slowdown, "which remains a concern".
Modern trade, however, has grown by more than 75% in the second quarter of the current fiscal, driven by channel-specific packs, contributing 9% to overall sales.
E-commerce performed significantly better, with more than 180% growth in Q2. Focus on differentiated portfolio strategy, robust media, and consumer promotion were key drivers of online sales growth.
The international business remained intact, clocking growth of more than 50% in Q2. "Middle East and Africa performed well, backed by efficient distribution and servicing of the market," the company said in a presentation.
Shares of Bajaj Consumer fell 4.5% as of 3:06 p.m. on the BSE, compared with a flat Nifty 50 index, after the results were declared. The stock has tanked 21% year-to-date in 2022.
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