Dabur Q3 Update: Revenue Growth Estimated In Mid-To-High Single Digit

Dabur India Ltd. has estimated that its revenue in the October-December quarter will grow to mid-to-high single digit, driven by food business even as the late arrival of winter hurt the healthcare division.

The maker of Real fruit juice and Honitus cough syrup brands said that early signs of revival in consumption were visible during the festive quarter, but persistent weakness in rural segment remains a concern. This coupled with waning product price hikes impacted revenue growth.

"The quarter witnessed sequential improvement in demand trends, although rural growth was still lagging urban growth," Dabur said in its quarterly business update issued on Thursday.

With pricing growth remaining subdued due to price increases in base year, growth is largely volume-led, according to the company.

The domestic food and beverage category is expected to grow in high-single digit, while home and personal care division is expected to record growth in mid-single digit in the December quarter.

The company, however, anticipates the health care business to grow in low-to-mid single digit because of delay in onset of winter season.

The recently acquired Badshah Masala business "continued to perform well" and is expected to post "strong volume-led growth" in the high twenties.

Cost-saving initiatives and strong international performance helped the firm forecast a bigger gross margin expansion in the quarter.

"Our international business is expected to register double-digit growth in constant currency terms, led by good momentum in MENA (Middle East and North Africa) region," it said.

The company invested a significant portion of margin gains towards boosting advertising and promotional spends. Consequently, Dabur's operating profit is expected to grow slightly ahead of the revenue.

"We expect recovery of consumption in both urban and rural markets in India, due to improving macro indicators, increase in government expenditure and positive consumer sentiment," the company said.

Focus on brand building, enhancement of digital capability and increasing distribution footprint will be key in driving profitable growth in the future.

Shares of Dabur rose 2.53% on Thursday, as compared with a 0.66% gain in the benchmark Nifty 50. The update was released after market hours.