Demand Trajectory Slightly Improves Sequentially In March Quarter, Green Shoots Emerge, Says Dabur

Demand trajectory across urban and rural markets in India has shown a "slight improvement" sequentially in the March quarter, although it falls short of a full recover, FMCG major Dabur said.

Despite near-term consumption pressure, some "green shoots" are emerging such as moderating inflation, improving consumer confidence and increase in government spending. 

"While urban markets have returned to positive volume growth, rural markets still remain muted," said Dabur in its latest quarter updates.

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

Its F&B business continues to trend at robust levels and will report strong double-digit growth, while healthcare portfolio is expected to be in a positive growth trajectory, it added.

Home & Personal Care (HPC) will report low single-digit revenue growth on account of a slowdown in the personal care categories. "Our brands continued to record gain in market shares in most of the segments," it said.

March quarter also marks the consolidation of Badshah Masala, a business which it acquired. It is in the process of being integrated and is tracking as per expectations. 

Over international sales, Dabur said it expects "high single-digit growth" in constant currency.

"However, due to currency headwinds in Egypt and Turkey, the reported growth in INR will be impacted. While there are short-term pressures, we are restructuring our distribution network in key markets and increasing investments behind our brands which will benefit us in the long term," it said.

"Overall, Dabur’s consolidated revenue is expected to report mid-single digit growth during the quarter," it said.

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

"India gross margins are expected to show an improvement, but Consolidated gross margin will be impacted mainly due to currency headwinds in International Business. We have also strategically increased our spending behind our brands, leading to short-term pressure on the operating margin, which is expected to be lower by around 200-250 bps as compared to Q4 FY22," it said.

While the environment has been challenging, the fundamentals of the business continue to be resilient.

"We will continue to invest strongly behind Power Brands, Innovation, Distribution expansion and a robust back end which will enable us to increase our market shares and achieve profitable and sustainable growth," it said.

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