Financial Performance Highlights

Q2 FY27 Performance:

  • Consolidated revenue grew by 36% year-on-year to INR1,088 crores
  • Domestic sales grew by 49% with volume growth of 43%
  • On a like-to-like basis (excluding Axiom and IncNut Digital from previous period):
  • Consolidated sales grew by 24%
  • Domestic business grew by 32% with volume growth of 26%
  • EBITDA grew by 25% to INR222 crores
  • Profit before tax grew by 29% to INR194 crores
  • Profit after tax stood at INR144 crores, lower by 3% due to normalization of effective tax rate following phased out fiscal benefits
  • Gross margin contracted by 520 basis points compared to last year (400 bps due to raw material cost inflation, 120 bps due to changing business mix)

H1 FY27 Performance:

  • Revenue stood at INR2,127 crores, up 25%
  • EBITDA at INR449 crores, up 15%
  • Profit before tax at INR388 crores, up 15%

Category-wise Performance

Core Portfolio Growth:

  • Skincare grew by 31%: Talc portfolio grew over 2X, BoroPlus grew in near 20s, Fair and Handsome delivered double-digit growth
  • Hair and scalp care grew by 30%: Navratna Oil grew in the 30s, Kesh King grew in high teens
  • 7 Oils in One nearly doubled sales and is now one of the fastest-growing brands in the core portfolio
  • Healthcare range grew by 11%: Pain management range grew in teens, OTC portfolio grew in high teens, Medico range posted steady single-digit growth

Strategic Investments Portfolio:

  • Grew by 73% on like-to-like basis
  • Contributed approximately 26% of domestic business
  • Axiom and Brillare more than doubled their sales
  • IncNut grew by over 50%
  • The Man Company grew by over 30%
  • Guidance upgraded to INR800-850 crores for full year (from previous INR750-800 crores)

Channel Performance

  • Organized channels now contribute 37% of domestic business
  • Modern trade and e-commerce maintained strong momentum
  • Quick Commerce accounts for around 15% of digital sales

International Business

  • Revenue declined by 2% in Q2 due to external disruptions
  • Nepal impacted by severe floods
  • Gulf markets faced supply chain challenges from ongoing regional conflicts
  • Excluding Nepal and Iraq, international business grew by 6%
  • October month showed high double-digit growth, indicating recovery
  • OTC goods movement (2% of global business) remains constrained due to hazardous categorization of spray and gaseous form goods

Capital Allocation

  • Completed share buyback worth INR281 crores to buy back 73 lakh shares
  • Board approved first interim dividend of INR5 per share, amounting to payout of INR214 crores

Operational Updates

New Launches & Expansions:

  • Launched Kesh King Scalp First range in modern trade and e-commerce (premium pricing INR500-INR1,000)
  • Expanding Axiom in modern trade chains and Quick Commerce
  • Investing in building visibility for AloFrut brand
  • IncNut expanding beyond D2C into marketplaces and international markets
  • Baby care range launched under BoroPlus brand at 25%-50% cheaper than competitors

Technology Initiatives:

  • Data analytics and AI platform implementation progressing ahead of schedule
  • Digitizing end-to-end processes from forecasting to fulfillment
  • Expected completion next quarter with real gains visible from April 2027
  • Pilot phases showing impressive results in some markets

Management Commentary & Outlook

Growth Expectations:

  • Expect core business to grow 18%-20% in second half of FY27
  • Strategic investments portfolio expected to continue strong growth
  • International business showing recovery with October in positive territory

Cost Environment:

  • Price increases of 5.5% implemented for full year to offset input cost inflation
  • Procurement at current prices expected to benefit margins in future periods
  • Advertising & promotion spend expected to remain in 18%-19% range for full year

Market Conditions:

  • Rural markets mixed with some districts in south, west and U.P. affected by drought conditions
  • Entering peak winter season with expectations of pickup post-Diwali
  • Commodity inflation and geopolitical developments remain areas to watch

Q&A Highlights

Product Strategy:

  • Baby care range positioned as mass market with competitive pricing
  • Kesh King Scalp First relies heavily on R&D with unique ingredients for detoxifying scalp and scalp serum
  • All strategic investment brands showing different growth levers with reformulation and improved product offerings

Profitability:

  • 520 bps gross margin contraction comprised of 400 bps RM cost inflation and 120 bps business mix change
  • Cost management initiatives helped deliver 25% EBITDA growth despite margin pressure

International Challenges:

  • Supply chain disruptions specific to certain geographies (Iraq, Black Sea route)
  • Found alternate routes through Port Aqaba for Iraq shipments
  • Different manufacturing footprint compared to peers affects supply chain flexibility