Demand trajectory improved a bit in Q4, green shoots emerged: Dabur

Says some 'green shoots' emerging despite near-term consumption pressure

Dabur

2 min read Last Updated : Apr 06 2023 | 10:31 PM IST

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Demand trajectory across urban and rural markets in India has shown ‘slight improvement’ sequentially in the January-March quarter (fourth quarter, or Q4), although it falls short of a full recovery, fast-moving consumer goods major Dabur India observed in its latest-quarter update.

Despite near-term consumption pressure, some ‘green shoots’ are emerging, such as moderating inflation, improving consumer confidence, and increase in government spending.

“While urban markets have returned to positive volume growth, rural markets remain muted,” it said.

In such a scenario, the consumer behemoth anticipates mid-single-digit revenue growth for the January-March quarter.

“India gross margins are expected to show an improvement, but consolidated gross margins will be impacted mainly due to currency headwinds in international business,” it said.

Its food and beverage business will report strong double-digit growth, while its health care portfolio is expected to be in a positive growth trajectory, notwithstanding the high base in the preceding quarter last year due to Omicron.

Home and personal care will also report low single-digit revenue growth on account of the slowdown in personal care categories.

“Our brands continued to record gain in market share in most segments,” said Dabur India.

In its international business, Dabur expects to register high single-digit growth in constant currency. Due to currency headwinds in Egypt and Turkey, the reported growth in the rupee will be impacted.

“While there are short-term pressures, we are restructuring our distribution network in key markets and increasing investments behind our brands which will benefit us in the long term,” it said in its update.

The maker of Vatika shampoo said it has strategically increased its spending behind its brands, leading to short-term pressure on its operating margins that are expected to be lower by about 200-250 basis points, compared to Q4 of 2021-22.

“While the environment has been challenging, the fundamentals of the business continue to be resilient. We will continue to invest strongly behind power brands, innovation, distribution expansion, and a robust back-end, which will enable us to increase our market shares and achieve profitable and sustainable growth,” it said.