Beardo records 10X surge in profit with revenue of Rs 78.5 Cr in FY20

Beardo has turned out to be one of the most successful direct to consumer brands in the men's grooming space. The company was acquired by Marico in a deal worth over Rs 350 crore in July this year. It’s also one of the rare D2C brands which offered an exit to its backers in the range of 6 t0 10X, and that too within a period of four years.

At the time of Beardo’s acquisition, its co-founder and chief executive Ashutosh Valani claimed that the company was profitable in FY20. Now, the company’s audited financial statements validate his claims. Beardo has churned a profit of Rs 2.2 crore in FY20.

The operating revenue for Beardo generated through sales of men’s grooming products has increased by 63% from Rs 48.2 crore in FY19 to Rs 78.5 crore during FY20. Beardo has managed to improve its production efficiencies and curbed costs with increasing scale. 

As a result, Beardo’s EBITDA margins have improved 4X to 31.1% during FY20 from around 7% in FY19. To fulfil the increase in demand, the company spent significantly more on procuring raw materials for its products. Cost of materials consumed increased by 92% to Rs 25.3 crore in FY20, Beardo purchased raw materials worth Rs 27.2 crore during the same period.

Expenses on employee benefits for the company also increased in line with any growth stage profitable company. The Ahmedabad-based company spent Rs 13 crore on employee benefits during FY20, a jump of 84.4% as compared to Rs 7.05 core spent on the same during FY19.

Expenditure on sales and marketing stood out as the biggest cost element on Beardo’s expense sheet, accounting for 45.1% of the total expenditure incurred by the company during FY20. These expenses increased by 42.3% from Rs 21 crore in FY19 to Rs 34.14 in the last fiscal.

While Beardo’s overall expenses have increased to account for the increase in demand, the jump in costs is still trailing behind the improvement in revenue figures. Total expenditure during FY20 amounted to Rs 75.62 crore, increasing by 57% as compared to Rs 48.15 crore spent during FY19.

The success of operational efficiencies put in place by the company during the preceding fiscal was evident in Beardo’s profitable figures of FY20. Profit (after taxes) shot up 10.2x to Rs 2.2 crore in FY20, making it the second consecutive profitable year for the Marico owned brand. Net profit margin also improved 16x from only .45% in FY19 to 2.77% during FY20.

While the company has now been acquired by FMCG leader Marico, Beardo funded its operations mainly through its revenue streams during the last fiscal. There were no outside borrowings made during the year and raised only Rs 2 crore through issue of capital.

Keeping true with its policy of asset-light model, the company held more than 96% of its total assets in the form of short term or liquid assets at the end of March 2020. Cash and cash equivalents registered a 3.4X jump to reach north of Rs 6.44 crore and Beardo’s net worth also improved by nearly 50% to Rs 12.72 crore during the same period.

Asset turnover ratio improved to 3.8 times and the company managed to increase its return on capital employed (RoCE) 4x to over 31.1% during the fiscal ended in March 2020.

Revenue wise, Beardo appears to be the category leader in the men’s grooming space as none of its peers are close to Rs 80 crore revenue. We recently wrote about its rival Ustraa’s FY20 results. The Wipro and Info Edge-backed company posted Rs 17.6 crore loss on Rs 60 crore revenue in FY20.

The other two major players in the segment are The Man Company and Bombay Shaving company. While the latter had a relatively small scale, The Man Company’s chief executive Hitesh Dhingra claimed that the firm would close FY20 with Rs 80-85 crore revenue. It’s yet to file annual returns for the last fiscal.