Brands
Deconstructing the beauty and personal care market
MUMBAI: This is one minnow who does not fear the whales. Nor the fierce competition in the ugly, competitive world of beauty and personal care products dominated by large players such as Procter & Gamble, Hindustan Unilever, L’Oreal, and smaller hungry-to-grow D2C brands such as Nykaa, Mamaearth, Wow Skin Science. Two-year old Bengaluru-based D2C startup Baypure Lifestyle has been charging into this segment, first online and now into the physical retail space. With 34-35 SKUs in its cosmetics bag ranging from face, hair and body serums to face washes, lip balms under the brand name Deconstruct, it has been clocking up a monthly revenue of Rs 25-27 million per month and is on track to hit Rs 360-400 million by end 2023-24. The target is to touch Rs 1000 million by 2025, and Rs 2000 million by 2026.
“Challenger brands are here to stay. We are going to disrupt the market. I don’t think we are worried about the legacy brands; I think legacy is being redefined,” says Deconstruct founder & CEO Malini Adapureddy, who has almost 12 years of work experience with companies such as P&G, Flipkart and Kraft Heinz and also has an engineering degree and an MBA from Insead, France under her belt.
How did she chance upon the name Deconstruct for a beauty products brand?
“The idea is that we are deconstructing complex skincare products and routines into ingredient/concern-based information to help the consumer understand the purpose of the product and pick the right one to minimize their skincare concerns. Every product manufacturer says we are being transparent but no one is being totally transparent. Deconstruct products are science-based and treatment-focused to tackle acne, ageing, dryness, dandruff, oily scalps, pigmentation, lip dryness etc. Using them you can treat trivial problems without having to go to a dermatologist. They are also evidence-based, that is, we guarantee results as a marketing strategy as well as a promise,” she reveals.
That’s a promise that investors like Kalaari Capital, Flipkart’s Binny Bansal, and Beenext have bought into, pumping in $2.4 million into her venture.
Pricing wise, Deconstruct’s products are in the Rs 300 to Rs 1.900 range (for kits) and are cheaper than most premium international brands but they sell in the price range of L’Oreal’s professional product series. “We are a mass premium brand,” she says.
The products are formulations which are normally found in pharmacy outlets in Europe and have ingredients like niacinamide, hyaluronic acid, alpha alburtin, salicylic acid, potassium-azeloyl-diglycenate and alpha hydroxy acids (AHAs).
Today, 90 per cent of Deconstruct’s sales are from online marketplaces, while only 10 per cent is from offline. Adapureddy says two years from the pandemic and lockdowns, consumption has been moving from digital to physical retail. The company has plans to make a push in that direction. Already it has set up a kiosk in Bangalore’s Vega City Mall on Bannerghatta main road, and is making inroads into the Health & Glow chain in southern India, apart from other retailers.
“We expect to expand our retail presence by five or six in the next three months, but focusing on the south,” says Adapureddy. The rapid growth in physical retail by the likes of Nykaa and Reliance’s Tira Beauty is what has emboldened her to take that route.
She is sanguine Deconstruct is on a good wicket as consumer needs are evolving. “Today, serums as a category have overtaken make up in terms of sales volumes on most online marketplaces whether it’s Amazon or Nykaa,” she points out. “Also we have almost no national competition in products such as scalp, antidandruff, exfoliating serums.”
Deconstruct has contracted four manufacturers in Maharashtra (two), Puducherry (one) and one in north India to roll out 50,000 units of its 35 SKUs every month. “We develop the formulations internally, test them and then do a tech transfer keeping a check on quality with our vendor manufacturers,” explains Adapureddy.
The company spends a lot of time on research and development, testing, before releasing the products for manufacture. (However, product turnaround times are quicker than that for the multinationals which can take up to 36 months to relaunch a product.) A large part of the team of 35 is focused on sales, marketing, and penetrating new markets. That is expected to balloon with the company making a retail push.
“We are having a good revenue run rate, our burn rate is also under control. We have 18 months of our capital raise runway left and our gross margins are healthy. I am pretty gung ho about our future,” she elucidates.
One of the reasons why the company’s burn rate is low relates to the fact that it has not resorted to any large scale print or TV ad spends like many other start ups tend to do. All of Deconstruct’s ad dollars are targeted on Amazon, Google and Meta ecosystems. “We put out a lot of educative ad content but in a manner that appeals to our targeted consumers,” she says. “Amongst these are movie memes around nostalgic pop culture films, which our audiences find quirky.”
Adapureddy admits that the biggest challenge she faces is whether the company can continue to innovate. “We have to be continuously innovative in our ad spends, in products by entering those white niche spaces before anyone gets in. We also need to be agile, continue to have that fire. Deconstruct is building for the knowledge economy what Unilever built for the aspirational economy.”
With high aspirations like that, Adapureddy and Deconstruct could well construct a good growth storyline and script for the consumer, themselves and their investors.
Brands
Microsoft faces worst quarter since 2008 financial crisis
Cloud giant battles soaring AI costs and fierce competition from nimble startups.
MUMBAI: When the tech titan starts looking a little wobbly, even the Magnificent Seven can feel the tremors because Microsoft is currently starring in its own sequel, “Clouds and Doubts.” Microsoft is on track for its worst quarterly performance since the 2008 global financial crisis, according to Bloomberg, as investors grow increasingly uneasy about rising capital expenditure and intensifying competition from nimble AI firms. The company has been pouring money into AI infrastructure, yet markets are questioning when these hefty investments will finally deliver stronger revenue growth.
At the same time, investors are shifting away from traditional software stocks amid fears that AI startups such as Anthropic and OpenAI are developing autonomous agents capable of replacing established products, including those from Microsoft. Jonathan Cofsky, portfolio manager at Janus Henderson Investors, noted growing concern that customers may bypass Microsoft and deal directly with AI vendors, potentially disrupting its core business and putting pressure on pricing and margins.
Microsoft’s stock has tumbled 25 per cent in the first quarter, putting it on course for its largest drop since a 27 per cent fall in the fourth quarter of 2008. It has also emerged as the weakest performer among the so-called Magnificent Seven technology stocks, while a broader index tracking the group has fallen 14 per cent over the same period. The shares slipped a further 1.7 per cent after markets opened on Friday, marking a potential fourth consecutive session of declines.
Cofsky pointed out that Microsoft has become more capital intensive and that improved investor confidence will hinge on assurances that software growth will not slow materially. Despite the sell-off, the stock is now trading at less than 20 times projected earnings over the next 12 months, its lowest valuation level since June 2016. Its valuation remains slightly above that of the S&P 500 Index, although it has recently traded at a discount to the broader benchmark for the first time since 2015.
Bloomberg data shows Microsoft’s capital expenditure, including leases, is expected to surge to $146 billion in fiscal 2026, up around 66 per cent from $88 billion in fiscal 2025. Spending is projected to climb further to $170 billion in fiscal 2027 and $191 billion in fiscal 2028, based on average estimates. Investors are growing cautious about such levels of spending without clearer signs of stronger growth.
Microsoft’s Azure cloud division has reported a slight slowdown in growth compared with the previous quarter, while its Copilot AI product has seen limited user traction, prompting internal changes aimed at improving performance. Ben Reitzes, an analyst at Melius Research, warned in a March note that Microsoft’s upside in Azure could be constrained as the company works to address challenges related to its AI models and Copilot offering, adding that these issues are unlikely to be resolved in the short term.
Of the 67 analysts covering Microsoft, 63 maintain buy ratings, three hold ratings and one a sell rating. The average 12-month price target of $592 implies a potential upside of more than 64 per cent, the highest on record based on data going back to 2009. The stock is also trading below its 200-day moving average by the widest margin since 2009.
Reitzes suggested the dominance of buy ratings may indicate complacency among analysts, while highlighting risks in Microsoft’s productivity and business processes segment as well as its More Personal Computing division. In contrast, Tal Liani of Bank of America reinstated coverage with a buy rating, citing durable multi-year growth prospects across cloud and AI. Jake Seltz, portfolio manager at Allspring Global Investments, maintained that Microsoft retains strong long-term value and that its AI strategy is likely to be validated over time, viewing near-term concerns as a potential opportunity for longer-term investors.
The report highlights a growing divergence in market sentiment, with optimism around long-term AI potential weighed against immediate execution risks and investor uncertainty. In the world of big tech, even the mightiest clouds can have silver linings but right now, Microsoft’s investors are scanning the horizon for clearer skies.
