FMCG major Dabur India will expand its gross margins growing forward, but it will still fall short of the levels seen in the last one and a half years, as recent price increases won’t sufficiently offset the competitive pressures, according to Chief Executive Officer Mohit Malhotra.
Dabur India’s gross margin increased 2.8 percentage points for both Q4 FY24 and full fiscal year, after it increased prices. However, the price hikes now are smaller than the prior years, said Malhotra during the company’s quarterly earnings call.
Long-term plan for improving margins
The management said that the company is investing in promoting products directly to doctors to boost brand awareness and sales. Dabur India also plans to introduce more products in segments such as baby care, skin care, and general healthcare, in order to earn higher margins.
In areas such as oral care and hair care, Dabur India has been focused on competing with rivals by offering lower prices to gain market share. However, the management said that there's a significant chance to shift gears and introduce premium products in these mass-market categories to increase profitability.
Volume-driven growth eyed
The management said that going ahead, growth will be driven by volume across categories. The management guided a mid-to-high single-digit volume growth going ahead. The company has also budgeted a three percent price increase, limited to a few parts of the portfolio.
Earlier today, Dabur India reported a consolidated net profit of Rs 341 crore for the January-March quarter, registering a growth of 16.5 percent year-on-year. Revenue increased 5.11 percent year-on-year to Rs 2,814 crore during the same period. Operating margin improved by 130 basis points year-on-year to 16.6 percent.
Revenue and net profit exceeded estimates. The company was expected to report a Rs 2,735-crore revenue, according to mean estimates of seven brokerage firms.
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