Dabur shares tank 5% on sluggish demand

Shares of fast-moving consumer goods maker Dabur India dropped 5% today after the FMCG company cautioned that demand trends remain sluggish in the quarter gone by.

"Demand trends remained sluggish during the quarter," Dabur India said in an update for the quarter ended March 31, 2024.

Reacting to the development, shares of the company fell 5% to hit a 52-week low of ₹502.55 on the BSE, taking its market cap below ₹90,000 crore. The stock has fallen 9% in 2024.

Dabur says rural growth picked up fuelled by price roll backs in staples which led to the gap between rural and urban narrowing. “With a positive outlook for the rabi crop harvest and monsoon forecast to be normal we expect consumption to pickup in the coming months,” it says.

Dabur says its consolidated revenue is expected to register mid-single digit growth during the last quarter of FY24. “The inorganic revenue growth which was to the extent of around 2.3% till YTD Dec 2023 on account of Badshah acquisition is now factored in the base,” the filing says.

In India business, the home and personal care segment is expected to grow in high-single digits. Healthcare and F&B segments are expected to register low single-digit growth. "F&B had a high base of last year and healthcare portfolio was impacted due to delayed winter," the company says.

"Badshah Masala continued to perform well and is expected to post strong volume led growth in the high teens. We continued to gain market share across our categories driven by strong execution in market," it says.

"International Business is expected to register double-digit growth in constant currency terms, led by good momentum in MENA region, Egypt & Turkey. However due to impact of currency depreciation in Turkey and Egypt the translated revenue in INR terms will show growth in mid single digits," it says.

"Gross margins are likely to continue to witness expansion on account of deflation in input cost and cost-saving initiatives. 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," the statement says.

"While the past year was challenging in terms of consumer demand, we expect improvement in consumption going forward as macro-economic indicators continue to be robust. Our focus on investing behind our brands, distribution expansion, manufacturing capabilities and organisation will keep us in good stead to capture the opportunities in the market place," it says.

The FMCG firm reported a net profit of ₹514 crore for the December quarter. Dabur India's revenue for the third quarter stood at ₹3,255 crore, up 7% compared with ₹3,043 crore in the same quarter last year.