Dabur completes acquisition of 51% stake in Badshah Masala; stock rises

Shares of Dabur India rose over 1% in early trade on Tuesday, in sync with the broader market, after the FMCG major completed the acquisition of a majority stake in spice brand Badshah Masala. The company, engaged in manufacturing of personal care, healthcare, and food products, has acquired a 51% equity stake in Badshah Masala, marking its entry into the over ₹25,000 crore branded spices and seasoning market in India.

"Proposed acquisition of majority stake in Badshah Masala, we wish to inform you that pursuant to Share Purchase Agreement ("SPA") and Shareholders Agreement ("SHA") executed by Dabur India with the existing Promoters and Shareholders of Badshah, Dabur has acquired 51% equity shareholding of Badshah from its shareholders upon fulfillment of terms and conditions as per SPA and SNA and the said transaction has been completed on January 2, 2023,” the company said in a BSE filing on Monday.

Following the completion of the deal, Badshah Masala has become a subsidiary of Dabur India, effective from January 2, 2023, it added. Badshah is engaged in the business of manufacturing, marketing and export of ground spices, blended spices, and seasonings.

In October last year, Dabur signed a deal to acquire 51% stake in Badshah Masala for ₹587.52 crore, less proportionate debt as on the closing date, with the Badshah enterprise being valued at ₹1,152 crore.

"Our investment in Badshah Masala will help expand this business and continue to provide unmatched quality products. This acquisition will accelerate our growth strategy as we continue to build our Foods business. We intend to leverage our international market presence to grow this business globally," Mohit Malhotra, chief executive officer, had said on the deal.

Following the announcement, shares of Dabur India gained as much as 1.2% to hit a high of ₹568.35 on the BSE, while the market capitalisation stood at ₹99,715 crore. In comparison, the BSE Sensex was trading 75 points higher at 61,242 levels.

Dabur share price has fallen over 3% in the last one year, while it has rebounded 7% in the past six months. The FMCG heavyweight has dropped 4% in a month and 1.5% in a week.

Last month, Burman family, the promoter of Dabur India, sold 1% stake in the personal care products company through a block deal. The promoter offloaded the stake in the company to raise funds for financing some ventures held privately by the Burman family. At the end of September quarter, Burman family held 67.24% stake in Dabur India, while public shareholders owned the remaining 32.76% shares.   

For the July-September quarter of the current fiscal (Q2 FY23), the consumer goods company reported a 2.85% decline in its consolidated net profit to ₹490.86 crore for the second quarter ended September 30, 2022, compared with ₹505.31 crore in the same quarter a year ago. The consolidated revenue from operations rose 6% to ₹2,986.49 crore in Q2FY23, against ₹2,817.58 crore in the corresponding quarter of the previous fiscal. The top and bottom line growth were impacted by inflationary pressures and the consequential impact on consumption. The board of company also declared an interim dividend of ₹2.50 per share, aggregating to a total payout of ₹442.94 crore for the financial year 2022-23.