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Informist, Thursday, Aug 1, 2024

By Avishek Rakshit

KOLKATA – Volume-driven growth in its domestic business, backed by an expansion of its distribution base, helped ayurveda products major Dabur India Ltd post 7.8% growth in consolidated net profit at 5 bln rupees for the June quarter. The company's consolidated revenue rose nearly 7% on year to 33.5 bln rupees. The results were exactly in line with the Street’s projections.

Revenue from the consumer care business, which accounts for 77% of Dabur's revenues and 85% of its pre-tax profits, grew 7.3% at 25.7 bln rupees. Profit from this business vertical surged 8.7% to 6.1 bln rupees. Revenue from Dabur's foods business grew 5% to 7 bln rupees. Profit from this segment increased by 6.1% to 983.3 mln rupees. The company's consumer goods business in India, which comprises these two and other verticals, posted a volume growth of 5.2% for the quarter.

Dabur’s earnings before interest, tax, amortisation, and depreciation surpassed the Street’s estimates. The company posted an EBITDA of 7.8 bln rupees, against the Street’s projection of 6.6 bln rupees.

“It has been a good start to the new financial year as we drove sequential recovery in volume growth, driven by rural markets, to report industry-leading performance across our key verticals,” Mohit Malhotra, chief executive officer, said in a statement from the company. “Our focused approach towards expanding our rural footprint to over 1.22 lakh (122,000) villages reaped rich dividend as rural demand outpaced urban demand by 350 bps (basis points) during the quarter.”

Dabur is among the few companies in the fast-moving consumer goods industry to say rural demand has outpaced urban demand. Colgate-Palmolive (India) Ltd made a similar observation while declaring its financial results for the Apr-Jun period.

Dabur’s direct competitor, Emami Ltd, which also declared its financial results today, said green shoots in terms of a pick-up in demand have started appearing in the rural economy, but cautioned that increasing food inflation continues to affect discretionary spending in rural areas. Nevertheless, Emami outpaced Dabur, reporting volume growth at 8.7%.

Dabur said that along with the expansion of its rural distribution network, it launched affordable and rural-specific pack bundles across product categories to increase sales. The company also invested in consumer activation in the hinterland. Consumer activation refers to the tactic of promoting a relationship and fostering goodwill between retailers and customers. This helps companies to create more informed strategies. Currently, Dabur products are available at 7.9 mln retail outlets.

The value-pack strategy of selling products resulted in Dabur’s oral care portfolio achieving double-digit growth led by the Dabur Red mother brand, which grew 12% and gained in market share. The Vatika shampoo brand reported 12% revenue growth and also registered market share gains. Revenue from Dabur's coconut oils grew by 20%. Perfumed hair oils outpaced the category growth and gained market share by 100 basis points.

In home care products, Odomos and Odonil performed well, surpassing category growth rates and achieving market share gains of 500 basis points and 194 basis points, respectively.

While the harsh summer hurt the revenues of companies like Tata Consumer Products Ltd, it aided Dabur. Its glucose brand--Glucoplus C--recorded strong revenue growth of 30% and increased its market share by 70 basis points. The fruit drinks portfolio grew by 21%, and the carbonated fruit drinks portfolio grew by 90%.

The company reported market share gains across 95% of its portfolio.

Dabur's international business operations reported 18.4% growth in constant currency terms. The business in Egypt reported near 64% growth. Revenues from Nigeria grew 181%. The sub-Saharan African region posted 21.4% growth, followed by West Asia posting 13% growth.

The company’s advertising spends grew 15.4% during the quarter. Dabur reasoned that higher spending on marketing allowed it to drive demand during the quarter in key verticals like health supplements, digestives, shampoos, toothpaste, home care products, and beverages.

Shares of Dabur closed 1.2% higher today at 643.50 rupees on the National Stock Exchange. The company detailed its Apr-Jun earnings during market hours.  End

Edited by Rajeev Pai

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