BackKesh King’s Q2 sales rise 50% in boost for Emami
The hair oil and shampoo brand, acquired by Emami last year, likely clocked Rs75-77 cr in revenue in the quarter, say analysts
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Fifteen months after the acquisition of Kesh King hair oil and shampoo, the brand has emerged as the strongest growth driver for consumer goods maker Emami Ltd.
Led by hair oil, sales of the Kesh King range of products grew 50% in the September quarter over the same period a year ago, Emami said in a recent analyst presentation.
Emami acquired the Kesh King brand from its founders in June last year, paying Rs1,684 crore. It was widely seen as an expensive purchase, for which Emami had to borrow Rs900 crore. At the time of its acquisition by Emami, Kesh King was generating around Rs50 crore in quarterly revenue.
The Kesh King range exceeded internal targets, director Mohan Goenka told analysts in a conference call. Though the company didn’t give exact financial details, most analysts estimate the Kesh King range to have clocked Rs75-77 crore in revenue in the September quarter.
Addressing analysts, Goenka said Emami had internally estimated Kesh King to generate Rs75-80 crore in quarterly revenue, adding that the “first target" had been achieved ahead of expectations. Margins, however, have not improved, Goenka admitted in the conference call.
Kesh King has now “stabilized" and Emami is expecting sales of its hair oil and shampoo to expand 8-10% quarter-on-quarter, according to Goenka. Hair oil sales are growing faster, at around 73%, than shampoo sales, at around 15%, he added.
Within the Kesh King range, 80% of revenue came from hair oil and the rest from shampoo. Emami, according to Goenka, is focusing on hair oil sales more than on shampoo.
Sathyanarayanan M., an analyst at Cholamandalam Securities Ltd, said Kesh King sales under Emami were initially hobbled by overflowing inventory in trade channels, but the firm has managed to resolve those issues. Kesh King, however, continues to face competition from brands such as Patanjali and Indulekha.
In his estimate, the Kesh King range delivered around Rs60 crore in revenue in the September quarter, and in the full year, it would turn in around Rs260 crore in revenue.
The earlier target of Rs300 crore in full-year revenue can only be achieved if Emami can scale up Kesh King sales to Rs80-85 crore a quarter through the second half of the fiscal year, Sathyanarayanan added.
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