India's FMCG sector has been navigating a difficult phase over the past few quarters. Volume growth remains erratic across key segments. While rural demand is strong, urban demand has been slower than anticipated. At the same time, margin expansion has been constrained by pricing corrections and competitive intensity. In this environment, sustaining double-digit growth has been difficult and execution gaps have become more visible across categories.
Decoding the Q3 Profit Surge
Against this backdrop, Bajaj Consumer Care has emerged as a clear outlier, marking a significant turnaround in both top-line and bottom-line performance. Tracking its financials, Bajaj Consumer's share price has also doubled (up 102%) over the last one year, outperforming the Nifty FMCG (-6%) return. It has given 33% return in the last one month itself.
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In Q3FY26, consolidated revenue surged 33% year-on-year (YoY) to Rs 306 crore, driven primarily by strong double-digit volume growth in the domestic business. Operating leverage drove a significant increase in profit, with EBITDA rising 110% year-on-year to Rs 57 crore and margins expanding by nearly 600 bps to 18.6%. Gross margins increased sharply by 802 bps to 60%, supported by calibrated pricing actions and a favourable product mix.
Profit after tax also increased by 83% to Rs 46 crore in Q3FY26. Growth during the quarter was broad-based. Almond Drops Hair Oil (ADHO) led the performance with double-digit volume growth and market-share gains, driven by a revival in rural markets and improved traction in general trade. The non-ADHO portfolio also contributed positively, with the acquired Banjara's brand registering 15% growth.
Dominating the Light Hair Oil Segment
Bajaj Consumer is a leading Indian FMCG company and part of the Bajaj Group. The company operates primarily in the personal care segment, with a strong focus on hair oils and skincare. It has a deep domestic presence. Despite a relatively concentrated portfolio, the company has built scale through deep brand ownership and distribution strength.
At the core of the business is Bajaj Almond Drops Hair Oil. With a market share of over 63%, Almond Drops is the leader in the light hair oil category and remains the company's primary revenue driver. As of Q3FY26, Almond Drops captured its highest volume market share within the overall hair oil category in the last eight quarters.
This was driven by double-digit volume growth, supported by a revival in low-unit packs and sachets, and by a 37% increase in marketing spending. Management has indicated that the "heavy lifting" on the Almond Drops strategy is largely complete, suggesting recent gains are now driven by execution rather than structural changes.
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Coconut oil represents the second core pillar of the portfolio. The company recently recalibrated its pricing index relative to market leaders to ensure sustainable margins. Although essential for long-term competitiveness, the move weighed on near-term profitability.
Management believes the impact of these pricing corrections is now behind the business. The launch of Bajaj Gold Enriched Coconut Hair Oil in Q2FY26 has received a positive response from trade and consumers and is expected to support margins through premiumisation. Raw material prices, such as Copra, have also softened and are expected to ease further, supporting margins.
Beyond Almond Drops
Beyond Almond Drops and coconut oil, Bajaj Consumer has diversified into other hair oil variants and adjacent personal care categories. The portfolio mix currently comprises around 80% Almond Drops Hair Oil (ADHO) and 20% from the non-ADHO portfolio, including coconut oil, amla, and Banjara's range.
Following the acquisition of Vishal Personal Care, the company now owns the Banjara brand, which offers natural and Ayurvedic products, including herbal powders and face packs. This portfolio recorded 15% YoY growth in Q3FY26, indicating steady traction despite its smaller base.
In parallel, the company has extended the Almond Drops into adjacent categories, including serums, shampoos, conditioners, soaps, and body lotions. The company is also reviewing its broader portfolio beyond Almond Drops and coconut oil, with clarity expected over the next two to three quarters on whether certain products will be scaled up or phased out.
Management, however, is conscious of avoiding overextension. It plans to launch new products "a quarter at a time" where clear scaling opportunities exist. This marks a shift away from a "problem of plenty" towards a more focused approach.
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Project Aarohan: The Direct Distribution Gambit
Distribution remains a central pillar of Bajaj Consumer's growth strategy. Approximately 70% of revenue comes from general trade, while 30% comes from organized trade, including modern trade and e-commerce. Organized trade has been growing at a strong double-digit rate and is expected to continue outperforming. Within general trade, revenue is evenly split between urban and rural markets, at approximately 50% each.
The company currently has direct reach to approximately 6 lakh outlets across urban and rural markets, with total availability reaching nearly 45 lakh outlets. Under Project Aarohan, Bajaj Consumer is aggressively expanding its direct distribution footprint, aiming to increase direct coverage by approximately 10% annually over the next 4-5 years. It has already met its FY26 direct reach addition target.
In the states covered under the first phase of Aarohan, Haryana, Delhi, Rajasthan, Chhattisgarh, Maharashtra, and West Bengal, the company has seen a 25-40% increase in direct coverage of urban outlets. The immediate focus is now on stabilising this expanded reach and extracting productivity. The next phase of Aarohan, covering the remaining top states, is scheduled to begin in early FY27.
The Rural Revival: Can Aarohan Close the Growth Gap?
While rural growth revived in Q3FY26, it continues to trail urban growth. Management expects sequential improvement in rural markets as the go-to-market transformation stabilises and distribution productivity improves. The company believes that as Aarohan matures, rural volumes should gradually converge with urban trends.
On margins, recent improvements have been aided by what management describes as "low-hanging fruit." While aspirations for the margin profile exceed current levels, further expansion is expected to be gradual rather than sharp. The next phase of margin improvement is likely to come from scale benefits, premiumisation, and sustained distribution efficiency rather than aggressive pricing actions.
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Valuation Gap
Management is targeting a higher growth trajectory than in the past, aiming to sustain consistent double-digit growth. This confidence is underpinned by strong recent performance across core brands, stabilisation of pricing actions, and the ongoing distribution transformation.
In a sector grappling with uneven demand and margin pressures, Bajaj Consumer's recent performance highlights the impact of focus and disciplined execution. With its core portfolios stabilised, distribution expansion underway, and innovation becoming more selective, the company appears better positioned than many peers.
At a 30x price-to-earnings multiple (as of Feb 9, 2026), the valuation is a discount to larger peers Dabur (49), Godrej Consumer (62), and Marico (57), and is in line with Emami (28).
Disclaimer: The views expressed in this article are solely those of the author and do not necessarily reflect the opinion of NDTV Profit or its affiliates. Readers are advised to conduct their own research or consult a qualified professional before making any investment or business decisions. NDTV Profit does not guarantee the accuracy, completeness, or reliability of the information presented in this article.
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