Demand trajectory improves slightly sequentially in QTR March, green shoots appear, says Dabur

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The demand path in India’s urban and rural markets has shown a “slight improvement” sequentially in the March quarter, although not fully recovering, FMCG Major Dabur said. Despite near-term consumer pressures, some “green shoots” are emerging, such as moderating inflation, improving consumer confidence and increasing government spending.

“While urban markets have returned to positive volume growth, rural markets remain subdued,” Dabur said in his latest quarterly updates.

The company expects “mid-single digit revenue growth” for the January-March quarter in such a scenario.

The F&B business continues to evolve at a robust level and will report strong double-digit growth, while the healthcare portfolio is expected to follow a positive growth trajectory, it added.

Home & Personal Care (HPC) will report low-single-digit sales growth due to a slowdown in personal care categories. Our brands continued to gain market share in most segments.

The March quarter also marks the consolidation of Badshah Masala, a company it acquired. It is currently being integrated and tracking as expected.

On international sales, Dabur said it expects “high single-digit growth” in constant currency terms.

“However, due to currency headwinds in Egypt and Turkey, reported INR growth will be impacted. While there are short-term pressures, we are restructuring our distribution network in key markets and increasing investment in our brands, benefiting us will come in the long run,” he said.

“In general, Dabur’s consolidated sales are expected to report single-digit average growth during the quarter,” the company said.

During the quarter, inflation continued to cool for most of our commodities.

“Gross margins in India are expected to show improvement, but Consolidated Gross Margin will be primarily impacted by currency headwinds in International Business. We have also strategically increased our spend on our brands, leading to short-term operating margin pressure, which is expected to be about 200-250 basis points lower compared to Q4 FY22,” it said.

While the environment has been challenging, the company’s fundamentals remain resilient.

We will continue to invest heavily in Power Brands, Innovation, Distribution Expansion and a robust back-end that will enable us to increase our market shares and deliver profitable and sustainable growth.

This quarterly update will be followed by detailed financial results and earnings presentation once the Board of Directors of the Company approves the consolidated and separate financial results.

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