Mid-to-high single-digit revenue growth expected in Q3, says Dabur in Q3 update

Packaged consumer goods maker Dabur said in a third quarter update on Thursday that it expects consolidated revenue to register mid to high single-digit growth, a slight improvement over the July-September quarter.

The maker of Real juice, Hommade condiments and chyawanprash noted in a filing to the stock exchanges that its foods and beverages segment would lead growth in the quarter, usually the best performer in the October-December quarter due to the festive season and its juices portfolio.

Dabur said the third quarter has been better than expectations, also driven by its acquired Badshah masala franchise and its international business.

The company, which derives almost half of its annual sales from rural India, however, noted that demand in the hinterland continues to be a concern for the company. Rural demand has continued to lag behind urban demand, though the gap has reduced in the last quarter. Analysts said that demand in the December quarter is expected to be weak. Despite moderating inflation in diesel and fertiliser costs which augurs well for the rural segment, volume growth for most players would remain challenging in the December quarter, and possibly even the fourth quarter, Abneesh Roy, executive director of Nuvama Institutional Equities said in a report this week.

At an all-India level, Dabur noted that gross margins are likely to expand, led by moderating inflation and cost-saving initiatives, and added that a significant portion of gross margin expansion will be channelled into enhancing advertising and promotion spends. Consequently, operating profit is expected to grow slightly ahead of the revenue and post an improvement in year-on-year operating margins.

The company said its foods and beverages segment is expected to grow in high-single digits, and that its home and personal care portfolio which includes Vatika shampoo, is expected to grow in mid to single digits. “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.Dabur said in its update that the acquisition of the Badshah masala franchise would aid volume growth, adding that the brand may lead to strong volume-led growth in high twenties.

“The international business is expected to register double-digit growth in constant currency terms, led by good momentum,” Dabur noted.

Leave a Reply

Your email address will not be published. Required fields are marked *