AC Choksi Share Brokers Private Limited - Myiris.com

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A C Choksi Share Brokers Private Limited INITIATION REPORT | BAJAJ CORP LTD. Sept 09, 2011 mn Ltr 25 20 15 10 5 0 AHO share as a % of LHO - Volume AHO share as a % of LHO - Value FY07 FY08 FY09 FY10 FY11 AHO LHO AHO volume as a % of LHO volume Source: A C Nielsen 60% 50% 40% 30% 20% 10% 0% A C Choksi Institutional Research 10 Rs. bn Strong volume growth of Almond hair oil: 9 8 7 6 5 4 3 2 1 0 FY07 FY08 FY09 FY10 FY11 AHO LHO AHO value as a % of LHO value During Q1FY12, ADHO had achieved a dominant market share (volume) of 50.4% in LHO category as compared to 38.4% in FY08. During the period, Almond hair oil category registered ~29% CAGR by volume far higher than LHO category’s ~18% CAGR and overall Hair oil’s ~17% CAGR. Heavy hair oils like coconut oil and Amla oils are growing in high single digits while LHO are growing in high teens. It is visible that ADHO gained market share at the expense of its competitors. With rising disposable income, consumers tend to up-trade and ADHO emerged as a key beneficiary of changing consumer preferences. ADHO is gaining market share from coconut hair oil, amla oils, other LHO and unbranded hair oil. Major conversion came from Marico’s Parachute Coconut Oil (CNO) and Dey’s Keo Karpin. While Marico maintained its dominant market share in CNO category due to continuous conversion from unbranded hair oil users to branded CNO users, Dey’s Medical’s Keo Karpin lost its dominant position in LHO segment. Keo Karpin had market share of 42% in LHO category during FY04 which declined to 19% in FY11. 60% 50% 40% 30% 20% 10% 0%
A C Choksi Share Brokers Private Limited INITIATION REPORT | BAJAJ CORP LTD. Sept 09, 2011 Premium positioning; High Realizations: ADHO is positioned as premium value-added hair oil due to its differentiation properties in terms of product (almond based) and packaging (glass bottle). The product is made from almond extracts with added Vitamin E and it is packaged in a glass-bottle instead of a PET-bottle, which helps to preserves the product properties for a longer period of time. Thus, Bajaj Corp has created a niche category of Almond Oil in LHO category which enables it to command premium prices as compared to its peers. The company has successfully increased its prices from Rs 28 for 100ml in Mar’03 to Rs 46 in Apr’11 (CAGR of 6.4%), without hampering volume growth. The brand’s strong pricing power is evident from improvement in market share (by value) from 31.4% in FY06 to 54.2% in Q1FY12. In LHO category, ADHO’s closest competitors are Dey’s Medical’s Keo Karpin with ~19% market share and Marico’s Hair & Care with ~16% market share. While 100 ml SKU of Keo Karpin and Hair & Care are available at Rs. 37 and Rs. 42 respectively, ADHO’s 100 ml SKU is available at Rs. 46. We believe that ADHO will continue to maintain premium pricing going forward due to strong brand equity and niche category positioning. 100 ml ADHO Hair & Care Keo Karpin Source: Company Premium Pricing as compared to competitors 0 10 20 Prices( Rs.) 30 40 50 A C Choksi Institutional Research 11 37 42 46
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AC Choksi Share Brokers Private Limited - Myiris.com

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