Dabur Q1 Results Preview: Steady Growth Likely On Recovery In Rural Markets

Dabur India Ltd. is expected to show a steady performance in the first quarter of the current financial year.

The maker of Dabur Red Paste is likely to post a 6.9% rise in consolidated net profit to Rs 496 crore in the quarter ended June, according to a consensus estimate of analysts tracked by Bloomberg.

Analysts highlight the recovery in rural markets, strong growth in healthcare and personal care segments, and strategic distribution efforts as key drivers.

While the food business faces challenges from lower out-of-home consumption, the overall outlook remains positive with expected improvements in product mix and international sales, according to brokerages.

Key monitorable indicators include rural growth, new category performance, and international business expansion.

• Revenue likely to rise 6.8% to Rs 3,343 crore versus Rs 3,130 crore.

• Ebitda expected to rise 9.2% to Rs 661 crore versus Rs 605 crore.

• Margin expected expand to 19.8% versus 19.3%.

• Net profit expected to rise 6.9% to Rs 496 crore versus Rs 464 crore.

• Recovery in rural markets should support its portfolio, as it is heavily skewed towards rural areas.

• In domestic business, healthcare, oral care and food businesses are expected to grow faster than others.

• The distribution drive will further contribute to rural growth.

• Ebitda margin remained in the range of 19–20% for the past several years. The margin is expected to improve in the coming years due to a better mix of products, such as higher healthcare offerings, and increased pricing in high-market-share brands.

• Consolidated sales are expected to grow by 6%, led by home and personal care and healthcare portfolios.

• The food business was impacted due to weaker sales of beverages, led by low out-of-home consumption.

• Ebitda-margin expansion to moderate to 50 basis points owing to higher ad spends.

• Key monitorables: New-product-development performance and new launches in niche segments; domestic demand outlook; rural expansion and growth; international business performance and distribution expansion; direct-to-consumer foray update.

• Estimates revenue growth of 7.4%, led by domestic sales growth of 5.8% and international sales growth of 12%.

• Dabur is likely to see a 5% volume growth in domestic business, with an estimated 9% growth in food and beverages, 5% growth in personal care and 3% growth in the health supplement business.

• Gross margin is likely to expand by 158 bps on the back of benign commodity prices.

• Expects ad spend to increase 71 bps (percentage to sales) and operating-margin expansion of 44 bps to 15.8%.

• Monitorables: Revival in rural growth, success of newly forayed categories.