The maker of Almond Drops hair oil, Bajaj Corp has chased a 12 and 18 per cent growth in sales in the June and September 2014 quarters with a solid 30 per cent growth in the December 2014 quarter (over the year ago). Cheaper prices of major raw material liquid light paraffin (LLP) allowed the company to splurge on advertising, while keeping profit margins healthy.

The Bajaj Corp stock is up 3.6 per cent in trade so far; it hit its 52-week high of Rs 437.5 during the day but has corrected since.

Up and away

Bajaj Almond Drops Hair Oil, at a 90 per cent revenue contribution, drives company performance. In the light hair oil market segment, the Almond Drops brand took its market share higher to 58.7 per cent for the first eight months of this fiscal, a percentage point over the share in the 2013-14 year.

The strong sales growth was ably supported by a 21 per cent volume expansion as well, a marked improvement from the 3.5 per cent and 8.8 per cent in the two preceding quarters over the year ago period. With over 60 per cent of revenues coming from the urban segment, lower inflation could have spurred growth, besides an advertising and promotion push.

On the cost front, Bajaj Corp gained from benign prices of LLP (a crude oil derivative) and refined oils, both key inputs. As a proportion to sales, raw material costs dropped to 37.4 per cent in the December 2014 quarter, compared to the 39.4 per cent in the year ago quarter. Savings on inputs were channeled into adspend, with the adspend-to-sales ratio moving sharply higher to 8.5 per cent of sales against the 5.4 per cent in the December 2013 quarter. The ratio is at the highest it has been since the September 2013 quarter.

Operating profit margins for the recent December quarter rose to 23 per cent, a three-percentage point improvement from the December 2013 quarter, with rationalisation in other expenses along with cheaper inputs helping. Net profit grew 33 per cent for the quarter over the year ago.

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