FMCG major Dabur gained 5 percent on February 1 after the company reported largely in-line performance, with the consolidated net profit coming in at Rs 514.22 crore for the third quarter of FY24, growing 8 percent on-year.
Total revenue of the company stood at Rs 3,255 crore, rising 7 percent from Rs 3,043 crore a year back.
As of 9.30 am, shares of the company were trading at Rs 560.5 apiece, higher by 3.9 percent on the NSE.
On January 31, the shares of Dabur closed higher at Rs 540.35, gaining 0.82 percent, on the NSE. Over the past six months, the shares have lost around 5 percent.
“Dabur continues to enhance its growth proficiency with portfolio interventions, distribution, and sustained thrust on branding, though tough macro remains unsupportive. However, these actions fortify its outlook on demand turnaround,” said Emkay Global, a domestic brokerage.
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The company’s domestic business volumes rose 4 percent on-year, with market share gains across 90 percent of its portfolio. Gross margin expansion of 310 bps (to 48.6 percent) absorbed the need for higher A&P spends (+160 bps YoY to 7.5 percent) and higher litigation costs, leading to 50 bps expansion in EBITDA margin to 20.5 percent, added Emkay.
Additionally, unlike other FMCG companies, the rural sector beat cities by 200 bps for Dabur, indicating early signs of recovery. “Superior execution drove rural outperformance over urban markets,” Nuvama Institutional Equities said. The rural segment grew around 6–6.5 percent as against 3.8 percent in urban markets.
Motilal Oswal noted that Dabur is curating a portfolio for rural, where it shall be adding products in the Rs 5 to Rs 20 bracket, so that the price ladder helps deepen the market penetration. Dabur's direct reach stood at 1.42 million outlets, which may increase to 1.5 million by the end of the fiscal year.
Since the FMCG major has positioned itself to maximise on the rural sector, the counter will be closely watched to see if any announcements during the Interim Budget 2024 will attempt to boost rural consumption, giving the FMCG player tailwinds.
Also read | Dabur Q3 net profit rises 8% to Rs 514 crore, misses estimates marginally
“With improving volume trajectory and no price-cut impact on revenue (unlike peers), we expect revenue growth outperformance to sustain in the near term,” said Motial Oswal, maintaining its buy call, with a price target of Rs 635 per share.
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