Gillette India Limited — Q1 FY25 earnings call

Call held 18 Sep 2024

Management summary

Gillette India delivered a strong performance for the fiscal year ended June 30, 2024, characterized by balanced top-line and bottom-line growth. The company successfully navigated a shifting male grooming landscape (the 'beard culture') by pivoting towards styling and premium tools like Gillette Labs. Despite competitive pressures in the entry-tier Oral Care segment, the company maintained its market leadership through productivity-led reinvestment in product superiority and digital-first distribution strategies.

Highlights

  • Delivered annual sales of ₹2,633 crore, representing a 6% YoY growth.

  • Profit After Tax (PAT) reached ₹412 crore, up 16% YoY, driven by topline growth and innovation.

  • Structural margins improved by 200 bps, supported by productivity interventions and premiumization.

  • Achieved productivity savings of over ₹45 crores during the fiscal year.

  • Grooming segment accounts for 80% of the company's business salience.

  • Distribution reach and coverage expanded by over 1.5x in the last 3 years.

  • Venus (Female Grooming) business has doubled in the last 5 years.

  • Appliances (Braun) currently contribute 2% of the category in India.

Concerns

  • Declining rural wages and rising unemployment

Key financials

  1. Revenue ₹2,633 Cr +6%YoY
  2. PAT ₹412 Cr +16%YoY
  3. Structural Margin Improvement 200 bps
  4. Productivity Savings ₹45 Cr
  5. Grooming Segment Salience 80%

What they filed

Q1 FY27: revenue up 10.7%, net profit up 8.9% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue782 686 767 707 811 +4%790 +15%792 +3%783 +11%
EBITDA190 183 226 210 208 +9%248 +36%277 +23%228 +9%
Net profit133 126 159 146 144 +8%172 +37%193 +21%159 +9%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

  • Grooming
    80% Business Salience₹3,300 Cr Category Size5% Category Growth
  • Oral Care
    15% Criss Cross Segment Growth100 Toothbrush Only Category Scope
  • Appliances
    2% Category Contribution

Guidance & targets

Market Share

  • Oral Care Category Growth Market Share · FY25 · Medium confidence mid-single digits
    We expect Oral care as a category to demonstrate market growth of mid-single digits, in line with FMCG market growth.

    — Gautam Kamath, CFO

Volume

  • Rural Demand Trend Volume · Near Term · Medium confidence keep up with positive trends
    With monsoons across 75% of the countries districts normal or above normal, rural demand is expected to keep up with the positive trends.

    — Gautam Kamath, CFO

Risks & concerns

  • Declining rural wages and rising unemployment

    high

    Management identified these as key 'watchouts' that could impact consumption trends despite positive monsoon data.

    Management acknowledged

  • Competitive activity in entry-tier Oral Care

    medium

    Intense competition in the mass toothbrush segment has slowed growth, forcing a focus on premium niches.

    Management acknowledged

  • Volatile macro dynamics

    medium

    Expectation of continued volatility in the global and domestic economic environment.

    Management acknowledged

Areas of evasion (1)

  • Refused to share specific revenue mix and sub-segment shares due to competitive reasons.

Q&A highlights

3 direct
Impact of Beard Culture on Male Grooming Direct
The trend is shifting towards more men now preferring to grow beards... this presents an opportunity for us to position our premium systems, appliances, and trimmers to delight consumers for this new set of jobs.

Confirms management's strategy to offset potential shaving frequency declines by premiumizing the styling and shaping category.

Asked by Mehul Savla, Ripplewave Equity Advisors LLP

Slow Growth in Oral Care Segment Direct
Our growth has been slow in the Oral Care segment due to competitive activity in entry tier. Despite the challenges, we have been able to maintain our business size in the category.

Highlights the competitive pressure in the mass-market toothbrush segment and the company's pivot toward premium 'Criss Cross' and electric brushes.

Asked by Sunny Bhadra, Nirmal Bang Institutional Equities

Pricing Strategy for Gillette Guard Direct
We introduced the upgraded Guard product with platinum coated razors... at the price point of Rs. 12. Platinum provides consumers with more confidence on safe shaving versus stainless steel.

Demonstrates the company's ability to take price increases at the entry-level by adding tangible product value (platinum coating).

Asked by Subham Sharma, Aditya Birla Sun Life AMC

2 min read 5 chapters

Detailed narrative

Fiscal Year 2023-24 Financial Performance

Gillette India reported a robust fiscal year with sales of ₹2,633 crore, a 6% increase YoY. Profit After Tax (PAT) grew significantly faster at 16%, reaching ₹412 crore. This bottom-line outperformance was driven by a combination of top-line growth, product innovation in premium segments, and a strong focus on productivity, which yielded over ₹45 crore in savings.

Strategic Pivot in Male Grooming

Management addressed the evolving 'beard culture' by repositioning its portfolio. Instead of viewing beards as a threat to shaving, the company is targeting the 'new job' of grooming, styling, and shaping. The Gillette Fusion portfolio has been redesigned as a beard styling tool, and the launch of Gillette Labs (a super-premium razor) aims to transform shaving into an extraordinary experience, helping maintain market leadership in a category valued at ₹3,300 crore.

Oral Care: Premiumization Strategy

While growth in the Oral Care segment has been slow due to entry-tier competition, the company is successfully growing its premium 'Criss Cross' sensitive range at a double-digit rate. Gillette clarified that it only operates in the toothbrush segment in India. The strategy involves upgrading packaging to reduce shelf clutter and accelerating the trial of power brushes (Oral-B iO) to drive higher value per user.

Operational Excellence and Productivity

Productivity is described as a 'muscle' fully embedded in the operating model rather than just cost-cutting. The company achieved a 200 bps improvement in structural margins this year. These savings are being reinvested into the 'five vectors' of superiority: product, package, brand communication, retail execution, and value, ensuring long-term competitiveness.

Distribution Expansion and Digital Transformation

The company's distribution reach has grown 1.5x over the last three years. A key driver is the 'Supply 3.0' journey, which uses AI and machine learning for store-level planning rather than cluster-based planning. This has resulted in 60% fewer touchpoints in the supply chain and helped storeowners optimize inventory by reducing non-moving stock.

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