Bajaj Consumer Care growth accelerates as ADHO and Aarohan expand distribution

Investment View and Valuation

In its October 15, 2026 Q2FY27 result update, Choice Institutional Equities retained its BUY rating on Bajaj Consumer Care Ltd with a one-year DCF-based target price of Rs 715.

The broker remains constructive on the company’s long-term strategy, which is centred on sustained Almond Drop Hair Oil (ADHO) growth, scaling the non-ADHO portfolio, premiumisation and Project Aarohan-led distribution expansion. Choice expects sustained double-digit growth and operating leverage to deliver revenue, EBITDA and PAT CAGRs of 15 per cent, 22 per cent and 21 per cent, respectively, over FY26 to FY29E.

Q2FY27 Financial Performance

Bajaj Consumer Care reported Q2FY27 revenue of Rs 3,328 million, up 25.5 per cent year-on-year and down 2.6 per cent quarter-on-quarter. Revenue was 1.0 per cent above Choice’s estimate of Rs 3,295 million. EBITDA rose 72.1 per cent year-on-year to Rs 823 million, 4.6 per cent above the broker’s estimate, while the EBITDA margin expanded 671 basis points year-on-year to 24.7 per cent and was 85 basis points ahead of estimate. PAT increased 65.9 per cent year-on-year to Rs 702 million, 4.9 per cent above Choice’s estimate.

The result was ahead of expectations, led by continued ADHO momentum and a stronger-than-expected EBITDA margin despite lower gross margin.

ADHO and Non-ADHO Growth

Domestic ADHO revenue grew more than 30 per cent year-on-year in Q2FY27, supported by robust double-digit unit-volume growth. Choice estimates ADHO volume growth at 11 to 12 per cent. Price Point Packs, which account for about 20 per cent of the portfolio, outperformed.

Management sees further headroom from broader distribution, premiumisation and brand strengthening. Distribution expansion contributed an estimated 2 to 3 percentage points to Q2FY27 volume growth.

Non-ADHO maintained strong momentum and improved profitability, led by the coconut portfolio. Banjara is testing new SKUs in core southern markets for larger mass-market categories, while a new amla oil mix is being tested in General Trade.

Project Aarohan and Distribution Expansion

Project Aarohan is a key driver in the investment case. Since Aarohan 1.0 began in H2FY25, Bajaj Consumer Care has added more than 1 lakh outlets, appointed over 1,100 distribution partners and closed 670 vans.

Direct distribution is about 50 to 60 per cent of larger peers’ level, with a medium-term target of 75 to 80 per cent. Aarohan 2.0, launched in Q2FY27, aims to expand direct distribution by 10 per cent in urban markets and more than 10 per cent in rural markets across all 27 states.

Management indicated that the programme typically provides a one-time 200 to 300 basis point growth uplift before delivering longer-term execution benefits.

Management Guidance and Key Risks

Management maintained high-teen revenue-growth guidance for FY27 and long-term EBITDA margin guidance in the low-to-mid-20 per cent range. The company plans a further approximately 5 per cent consumer-price action in Q3FY27, comprising a 2 to 3 per cent price increase and the balance through grammage reduction, to mitigate elevated raw-material costs.

The company is also using shorter, leaner procurement and plans to rationalise non-media spending and other costs. Commodity costs remain a monitorable risk, with Light Liquid Paraffin and refined mustard oil indices at 152 and 155, respectively, against a Q1FY25 base of 100. The copra index rose from 149 in Q1FY27 to 171 in Q2FY27.

Estimates

Choice raised FY27E and FY28E revenue estimates by 3.6 per cent and 2.7 per cent, respectively. For FY29E, the broker projects revenue of Rs 17,940 million, EBITDA of Rs 4,023 million and PAT of Rs 3,381 million.