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Motilal Oswal Report
Dabur India Ltd.'s revenue was in line with our estimates in Q4 FY23. Volumes grew ~1% versus our expectation of 5%. Rural markets remained lackluster; however, the management witnessed some green shoots at the end of the quarter.
Ebitda margin contracted 270 basis points YoY to 15.3%, the lowest in the last 35 quarters. It was affected by an adverse product mix, a step-up in media spends and one-off expenses to the tune of Rs 250-300 million.
It seems margin has hit the trough; however, a recovery to 20% Ebitda margin would be gradual as most of the gains from the gross margin expansion would be invested back in media spends.
Despite near-term challenges, Dabur India (with nearly half of its domestic sales coming from rural) remains a good play on the incipient but gradual rural demand recovery theme.
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