BAJAJCON

(BaCo) had another disappointing print with a 3% YoY revenue decline (~2% YoY volume decline) due to continued stress in wholesale channel for core ADHO (~80% revenue salience), while diversification journey continues, though at a moderated pace. Project Aarohan (expand urban direct distribution and village reach) being expanded to rest of India (after implementation in MP and UP) augurs well growth in ADHO portfolio. However, overall revenue growth has not seen any improvement and demand environment for category is crucial for improved results. Acquisition of Banjara’s (south India based naturals positioned brands in personal care) at ~2x EV/sales FY24 appears inexpensive, though revenue CAGR of 14% over last four years appears low for its size. Operating margin remains under pressure (down 344bps to 12.4%) due to commodity inflation and spends towards project Aarohan and IT infrastructure.