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Dabur expects Q3 profit growth to outpace revenue growth amid demand recovery
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GST rate cuts to 5% aided FMCG sector and inventory liquidation in October
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Rural demand outperformed urban areas in October-December quarter
Dabur India Ltd. expects consolidated operating profit and net profit to grow faster than revenue in the third quarter of the current financial year, amid demand recovery aided by GST rate revisions.
The government rejigged the GST rate structure to bring most consumer goods in the 5% bracket from late September, benefitting FMCG companies.
The following month, distributors and retailers focused on liquidating the existing higher-priced inventory in the channel, Dabur said in its provisional business update disclosed to stock exchanges on Monday.
Post trade stabilisation, consumer sentiment improved in urban and rural areas. Rural demand continued to outperform urban demand in the October-December quarter as well, the company said.
"... we expect consolidated revenue to grow in the mid-single digits with operating profit and profit after tax to grow ahead of revenue," the statement said.
The board will consider and approve the third quarter financial results at a meeting on Jan. 29.
Segment Growth
Dabur expects domestic home and personal care business to grow in double digits on the back of strong growth in hair oils and oral care category and register market share gains.
Healthcare business is expected to grow in low single digits, while culinary segment within F&B is projected to deliver double-digit growth.
Beverages, especially nectars and drinks, may see muted performance due to adverse seasonality. Despite this, the beverage portfolio gained market share during the quarter, reflecting strong consumer confidence in the 'Real' brand.
The international business is also expected to post near double digit growth in rupee terms, Dabur said.
Shares of Dabur settled 0.3% lower at Rs 521.20 on the NSE, ahead of the announcement, compared to a 0.3% fall in the benchmark Nifty 50. The stock is down 1% in the last 12 months.
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