Fast moving consumer goods (FMCG) major Bajaj Consumer Care Ltd (BBCL) has launched an 100 percent Henna product in the haircare segment at a time of muted demand and volume growth in the segment stemming from inflationary pressures.
Major brands in the henna haircare products market are Godrej Nupur Henna, Biotique, Khadi, Jovees, and VLCC.
The BBCL hair oil segment stayed broadly flat in the fourth quarter of FY23, with marginal growth in urban areas. The muted sentiment in the category could largely be attributed to inflationary pressures causing a decline of 6 percent in rural demand for the segment, ICICI Securities said in its report. The brokerage firm has revised the target price to Rs 200 from Rs 250.
Analysts tracking the sector have said that revenue growth remains sluggish due to a slowdown in the overall hair oil category. Based on BNP Paribas' analysis of category trends, it is observed that hair oil has maintained a consistent compounded annual growth rate (CAGR) in revenue at nearly mid-single digits over the past seven years, as well as the last three years, typically suggesting that this category is facing growth challenges as penetration levels continue to rise.
Analysts predict that the trends in raw material costs offer some reassurance regarding profit margins. However, analysts also added that the benefits of price hikes are expected to diminish and potentially reverse and there is a possibility of a decline in value growth.
"We find the street’s revenue estimate aggressive and this is without factoring in the El Nino risk and its potential impact on rural spending", the BNP Paribas report said.
The company's consolidated net profit grew 13 percent to Rs 40 crore for the fourth quarter ended March 2023 as compared with Rs 36 crore in the same quarter last year.
The company's revenue from operations climbed 15 percent to Rs 246 crore in the quarter aided by consistent volumes as compared with Rs 215 crore in the same quarter last year.
In the last six months, Bajaj Consumer's stock price has gained 14 percent. At 10:04 pm, the company's share price was quoting at Rs 192 apiece, down 0.13 percent from the previous day's close on the National Stock Exchange.
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