Chyawanprash-maker Dabur India is set to showcase its earnings report for the quarter ended December on January 30, 2025. The FMCG player is likely to see revenue grow in low single-digits as demand trends shall remain benign for the quarter.
According to a Moneycontrol poll of 10 brokerages, Dabur India is likely to report revenue at Rs 3,366 crore, rising 3.4 percent on-year compared to Rs 3,255 crore in the year-ago period. Net profit for the quarter is likely to come in at Rs 514 crore, flat on a yearly basis.
Earnings estimates of analysts polled by Moneycontrol are in a diverse range, so any positive or negative surprises may elicit a sharp reaction on the stock. The most optimistic estimate sees Dabur’s net profit rising by five percent, while the most pessimistic suggests the net profit could tumble over 12 percent on-year.
Dabur India had previously announced that it would post a register low single digit growth in the consolidated India revenue for the December quarter. "In Q3, inflationary pressures were witnessed in some segments which were partially mitigated through tactical price increases and cost-efficiency initiatives. We anticipate flattish operating profit growth in Q3," added the FMCG major.
What factors are impacting the earnings?
The delayed winter season, hygiene correction in distribution infra and increased competition are likely to add pressure on Dabur India's earnings show. Rural demand is gradually recovering, while urban demand remains subdued, affected by persistent food inflation, noted analysts.
Segment Performance: After the inventory correction last quarter, brokerages expect recovery in performance. However, Dabur India is likely to see mid-single-digit growth in HPC, which will be offset by flat growth in Healthcare and decline in Foods. The Food business is likely to be impacted due to weaker sales in beverages. However, the culinary business growth is likely to be strong.
International Business Performance: Dabur may see strong growth on a constant currency basis; however, currency devaluation (Turkey and Egypt) shall impact reported growth. However, growth will be slower in INR terms due to forex impact.
Price Hikes: Brokerages anticipate price hikes of mere one percent in Q3FY25. Price hikes taken in light of ongoing food inflation across the portfolio shall be offset by price cuts in the beverages business. The prices hikes have mitigated some inflationary pressure, but overall, EBITDA margins are still likely to contract.
Margins: Dabur India's continued A&P investment despite subdued volume growth to impact
profitability and squeeze margins. Motilal Oswal expects EBITDA margin expected to contract by 30 bps YoY to 20.2 percent, but Moneycontrol's poll suggests EBIT margins might slip to 19.9 percent.
What to look out for in the quarterly show?
Green shoots have been observed regarding rural recovery, which will support companies moving forward from next quarter onwards. Further, Emkay Global said, "We await execution ramp-up, where Dabur needs to align with the evolving trend and enhance its focus on growth categories. Its focus on topline will have a limit on margin expansion."
Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
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