Dabur shares close 4.7% lower on weak revenue growth estimates in Q4

Dabur India Ltd shares dropped more than 5% on Thursday, April 4, following an almost flat growth in revenue during the quarter ending on March 31, 2024, due to a sluggish demand in the period.

The company witnessed a growth in its rural demand, riding on rollback of prices in staples. This helped in narrowing the gap between rural and urban demand.

However, the company's consolidated revenue growth is estimated to remain within mid-single digits in the final quarter of the financial year 2023-24 (Q4FY24). Dabur has now factored in the inorganic revenue growth, which was around 2.3% till December 2023, on the back of the acquisition of Badshah, to the base.

Shares of Dabur India dropped as much as 5.4% to an intraday low of ₹502.3 apiece on the NSE after the release of Q4 business performance and demand updates. The FMCG stock, however, recovered some losses and closed at ₹506.05 per piece, down 4.7%.

Maintains positive outlook

The packaged consumer goods manufacturer has set a positive outlook for the rabi crop harvest, along with forecasting a normal monsoon, with consumption likely picking up over the upcoming months, according to March quarter performance updates and demand trends filed with the stock exchanges on Thursday.

F&B business to grow in low single digits

In the company’s India business, the Home and Personal Care (HPC) business is anticipated to grow in high-single digits, while the Healthcare, and Food and Beverages (F&B) segments are likely to register low single digit growth. Badshah Masala, on the other hand, continued to showcase good performance in Q4 FY24, with expectations of posting strong volume on the back of high-teens growth.

Dabur’s international business is likely to register a double-digit growth in constant currency terms, thanks to a good momentum observed in the MENA region, Egypt and Turkey.

However, the translated revenue in terms of Indian Rupee (INR) is expected to show growth in mid-single digits going ahead, given the impact of currency depreciation in Turkey and Egypt. The FMCG major’s gross margins are expected to continue witnessing expansion, given deflation in input cost as well as cost- saving initiatives.

Management remains optimistic about improvement in margins

“In line with the strategy to invest behind our brands we will see higher A&P spends. The operating profit is expected to grow slightly ahead of the revenue and post an improvement in Y-o-Y operating margins. Our focus on investing behind our brands, distribution expansion, manufacturing capabilities and organization will keep us in good stead to capture the opportunities in the marketplace,” Dabur India Ltd said.