Homegrown FMCG major Dabur India is actively seeking an acquisition in the direct-to-consumer (D2C) space, as disclosed by its Chief Executive Officer, Mohit Malhotra, on Thursday. The company’s keen interest lies particularly in the healthcare and personal care sectors, signaling its strategic move to expand its presence in these markets.
During the Investors’ Conference Call held after the results, Malhotra expressed that the acquisition would serve as a catalyst for Dabur India to enhance its presence in the rapidly growing premium segment. Additionally, it will play a pivotal role in fortifying the company’s position in urban markets, further reinforcing its foothold in the industry.
Furthermore, Dabur India, renowned for its iconic brands like Dabur Amla, Dabur Vatika, and the popular juice brand Real, is ramping up its investments in branding and promotional activities. This strategic move comes as the company experiences a consistent improvement in margins quarter on quarter, aided by the moderation of commodity prices.
When asked about any D2C acquisition, Malhotra replied, “We continue to scouting on targets in the D2C space also, particularly in healthcare and personal care… We are looking for a brand that will shore up margin and not be dilutive.”
“If we come across a company which is synergistic with the healthcare space and personal care space, skincare Ayurvedic play, we will evaluate them and its financially worthwhile, we will acquire the company,” he added.
Additionally, he mentioned that Dabur India has ample funds available in its balance sheet to pursue the acquisition of a direct-to-consumer (D2C) brand. Such an acquisition could potentially serve as a premium addition to Dabur’s urban business segment.
Earlier this year, Dabur India successfully concluded the acquisition of a 51 percent stake in Badshah Masala, a significant move that enabled the company’s entry into the branded spices and seasoning market.
Several FMCG companies such as HUL, Marico, ITC, and Tata Consumers Products Ltd etc are quite aggressive and had done several acquisitions in the D2C food space.
Over consumer sentiments, he said Dabur is witnessing a recovery in demand.
“During Q1, most commodities witnessed a moderation in inflation; in India, too inflation showed signs of easing, as witnessed in both CPI and WPI data. With this moderation in inflation there has been an uptick in volumes in both urban and rural markets, indicating promising signs of recovery in demand,” he said.
However, he added that the beverage portfolio of the company which includes juice brand Real got impacted by unseasonal rains in North and West India.
Its consolidated net profit increased 5 per cent to INR 464 crore in the June quarter on the back of robust sales.
The company had reported a net profit of INR 440 crore in the April-June period of the last fiscal.
The company’s revenue from operation during the June quarter rose 10.91 per cent to INR 3,130.47 crore as against INR 2,822.43 crore in the year-ago period, Dabur India said in a regulatory filing on Thursday.
“We remain committed to our strategy of superior go-to-market execution by enhancing our distribution footprint while focusing on driving growth for our power brands and building an agile organisation culture in our pursuit of sustainable, balanced growth and value creation,” Malhotra said.
The company has taken several measures to pursue greater efficiency and the gains were ploughed back in the form of higher investments to drive demand, he added.
“Our media spends grew 30 per cent in the consolidated business and 28 per cent in the India business,” Malhotra said.
He noted that with inflation softening, the company has seen its rural growth bounce back to high single digits after three quarters.
While rural growth continues to lag urban demand, the gap has reduced significantly, Malhotra said.
“We continue to strengthen our long-term competitiveness through investments in developing consumer-centric innovations and technology, as we deliver on our purpose of health and well-being for every household,” he added.
Shares of the company closed nearly 2 per cent lower at INR 554.70 apiece on the BSE.