Dabur India Ltd, a leading company in the packaged goods sector, unveiled its financial performance for the September quarter. The company posted a 3.3% year-on-year rise in profit, reaching ₹507.04 crore, while its revenue from operations surged by 7.27% to ₹3,203.84 crore. This performance is particularly noteworthy in the context of the Indian Fast-Moving Consumer Goods (FMCG) market, which witnessed a 3% year-on-year increase in sales volumes during the same period. One of the key factors contributing to Dabur’s robust performance was the expansion of its gross margins, which increased by 295 basis points, reaching an impressive 48.3%. This margin growth was primarily attributed to the moderation of inflation. Additionally, the company recorded a 10% increase in its earnings before interest, taxes, depreciation, and amortisation (EBITDA) during the quarter. Notably, Dabur significantly ramped up its investments in advertising and promotional activities by a substantial 42.6% during this period.
Mohit Malhotra, the Chief Executive Officer of Dabur India, noted a substantial upswing in urban demand in the past quarter, primarily influenced by innovative sales channels. Although rural growth still falls behind urban demand, the disparity between these sectors has reduced. Malhotra recognized that irregular monsoons affected rural consumption in the second quarter. Nevertheless, his outlook remains positive regarding the expansion of the Fast-Moving Consumer Goods (FMCG) sector. He attributes this optimism to the proliferation of modern distribution networks, increased minimum support prices (MSP), ongoing investments in infrastructure, successful crop sowing, and the commencement of the festive season.
Malhotra emphasised that while deflation affected most product categories, its impact was milder in petroleum-related products, and some deflation was also noted in packaging and edible oil. He anticipated that the company’s profit margins would continue to improve in the upcoming quarter.
Regarding product segments, Dabur disclosed an impressive 8.3% growth in its healthcare portfolio during Q2. On the other hand, health supplements showed relatively stagnant growth compared to the previous year. The home and personal care business achieved a notable 6.46% increase in sales, while the home care segment experienced a substantial double-digit growth rate. In the food segment, there was a significant 40% increase in revenues, but the beverage sector faced challenges due to unseasonal rains, resulting in a 10% decline in quarterly sales.
As per Amnish Aggarwal, who holds the position of Head of Research at Prabhudas Lilladher Pvt. Ltd., Dabur India Ltd.’s most recent financial outcomes aligned with anticipated figures, although there was a deficiency in sales volume, primarily in the beverages sector, which was adversely affected by unfavourable weather conditions. Aggarwal also highlighted the convergence in performance between rural and urban markets, a trend expected to persist given the optimistic signals emanating from rural sentiment. Furthermore, Dabur India Ltd. is poised to sustain its robust performance, driven by improved gross margins resulting from diminishing inflationary pressures.
