Consumer staples major Dabur India Ltd. shares tumbled three percent on January 6 after the firm shared its business update for the October-December period.
On January 3, Dabur India said the rural consumption for FMCG was resilient and continued to grow faster than urban in the December quarter.
At 9.22 am, Dabur shares sank to Rs 510.85 per share on the NSE, lower by 2.7 percent compared to the previous session's closing price.
"During Q3, rural consumption for FMCG was resilient and continued to grow faster than urban. While general trade was still under pressure, alternative channels like modern trade, e-commerce, and quick commerce continued to post strong growth. Dabur's consolidated revenue is expected to register low single digit growth during Q3FY25," said Dabur as part of its business update for the third 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 Dabur.
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International brokerage Morgan Stanley maintained its equal-weight rating, with a price target of Rs 531 per share, as the reports of consolidated revenue in low single digits is slightly under its estimates. The firm's focus should remain on driving market share gains, brand building and profitable growth.
Global broking house Macquarie also kept its neutral stance intact, with a target price of Rs 560 apiece. The brokerage noted that inflationary pressures weighed on Dabur India's EBITDA margins and drove weaker sales.
In Q3, Nuvama Institutional Equities estimated that demand trends shall remain benign sequentially as a delayed winter hurt the performance of Dabur's winter care portfolio. Price hikes taken in light of ongoing food inflation across the portfolio shall be offset by price cuts in the beverages business, added the brokerage.
"In our view, the stock could be under pressure in the near term, but we expect a gradual recovery in FMCG growth in tandem with improved macroeconomic indicators," added Nuvama, sharing a price target of Rs 650 per share, with a 'buy' rating.
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