Consumer goods manufacturer Dabur announced in its third-quarter update on Thursday that it anticipates a mid to high single-digit growth in consolidated revenue, showing a slight improvement compared to the preceding July-September quarter.
The producer of Real juice, Hommade condiments, and chyawanprash indicated in a filing to the stock exchanges that its foods and beverages segment is expected to spearhead growth in the quarter. This segment typically performs exceptionally well in the October-December quarter, primarily due to the festive season and the success of its juices portfolio.
Dabur reported that the third quarter surpassed expectations, attributing the positive performance to the acquired Badshah masala franchise and its international business.
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While the company generates nearly half of its yearly sales from rural India, it highlighted ongoing concerns about demand in these areas. Rural demand has consistently trailed behind urban demand, although there has been a reduction in the gap during the last quarter. Analysts predict that demand in the December quarter is likely to remain weak.
Despite the moderation in diesel and fertilizer costs, which bodes well for the rural segment, Abneesh Roy, the executive director of Nuvama Institutional Equities, noted in a report this week that volume growth would continue to pose challenges for most players in the December quarter and possibly even in the fourth quarter.
On a nationwide scale, Dabur observed that gross margins are poised to increase, driven by easing inflation and cost-saving measures. It emphasized that a substantial part of the gross margin expansion will be directed towards boosting advertising and promotional expenditures. As a result, the operating profit is anticipated to grow slightly faster than revenue, leading to an improvement in year-on-year operating margins.
Dabur’s Segment Projections:
The company stated that its foods and beverages segment is anticipated to experience high-single-digit growth, while its home and personal care portfolio, encompassing Vatika shampoo, is projected to achieve mid to single-digit growth.
“Because of the delay in onset of the winter season, the health care business is expected to grow in low to mid single digits,” Dabur said in its filing.
In its update, Dabur mentioned that the acquisition of the Badshah masala franchise would contribute to volume growth. Additionally, the brand is expected to drive robust volume-led growth in the high twenties.
“The international business is expected to register double-digit growth in constant currency terms, led by good momentum,” Dabur noted.