India Consumer – Hair Oil Day – Stronger, thicker, glossier

Anand Rathi Institutional Equities hosted the 'Hair Oil Day' on 23rd May 2013, which featured three Indian hair oil majors - Bajaj Corp., Emami and Marico. The companies projected strong growth for the hair oil segment, and guided for higher profitability especially owing to the falling inflation of late.

Enviable position in Indian hair care. Globally, hair care is primarily restricted to products such as shampoos, conditioners and serums. Besides, various hair-styling products, gels, lotions and hair colours are becoming popular in the West. However, in India, hair oil (a traditional hair-care product), dominates the hair-care market, commanding a ~52% share.

Hair oil, the fastest-growing category. The hair-oil segment has posted a steady 19% CAGR in the past six years. Value-added products like cooling oils and almond oils are growing much faster than the basic coconut and amla oils. Also, there is a vast unorganised hair-oil segment (currently ~50% of the hair-oil market), which can be tapped by hair-oil makers in coming years.

Macro economy conducive for growth. Favourable demographics, rising disposable incomes, deepening penetration and an untapped pool of opportunities are major reasons why we expect the hair-oil market to continue to expand steadily. With technological upgrading, the sector continues to grow healthily despite its 90%+ penetration and healthy per-capita consumption.

No fear of an MNC attack buoys prospects. Most global hair-care majors like Unilever, P&G and L'Oreal do not have any hair oil in their global portfolios. Hence, Indian companies have no fear of an MNC onslaught in the hair-oil segment. Some such as HUL have tried their hand at hair oil with the launch of Dove Elixir and Clinic Plus, but have had rather limited success.

Source : Equity Bulls

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