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Bajaj Consumer Care Ltd.’s Q3 FY23 results were below our estimate. While overall hair oil market de-grew by 4.5/4.4% in value/volume terms in Q3 FY23, the company witnessed a flat value growth.
Rural slowdown hampered overall general trade sales performance of Bajaj Consumer Care. Nevertheless, 2.2 times growth in new product development helped improve general trade sales.
E-com reported 84% growth, higher than any other channel. Modern trade also posted sharp recovery with 41% sales growth during Q3 FY23.
As the commodity prices have softened sequentially, there is a scope for improvement in gross margin. However, due to new product launches, advertising and promotion spends are likely to remain high.
We remain cautious on the premium hair oil category considering its discretionary nature and increased competitive intensity.
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