Dabur signals fall in profit, revenue for Q2 on low consumer offtake, brokerages slash targets; shares crack 8%

Over the past 12 months, Dabur India shares have risen 12 percent. In comparison, the consumer staples index Nifty FMCG has risen 28 percent.

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26 Aug, 2025 12:21

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In its business update for the second quarter of the current financial year, FMCG giant Dabur India said extreme weather events such as floods and heavy rains have impact consumption and consumer offtake. As a result, brokerages rushed to slash their target price on FMCG player as a result of its weaker-than-expected performance.

Dabur will be posting a mid-single digit decline in the consolidated India revenue for the September quarter. Dabur said its profitability will be affected in Q2FY25, and the operating margin is expected to fall in mid-to-high teens on account of higher investment and deleveraging.

At 9.15 am, Dabur India shares tanked to Rs 573, down 7.3 percent on the NSE compared to the previous session.

Also Read | Dabur plans to correct distributor inventory, costing a dip in topline

While brokerages expect the company to see recovering sales growth October onwards, the slower demand momentum is a cause for concern. According to Investec, the September quarter will be Dabur India's weakest quarter in four years.

International brokerage Citi has a 'sell' call on Dabur India, cutting its price target to Rs 570 per share. Following the business update, Citi slashes its FY25-27 earnings estimate by 3-6 percent.

Macquarie took a steeper cut in Dabur's FY25 EPS estimate, slashing it by eight percent, given a hit from channel inventory rationalisation. Macquarie also cut its price target on Dabur to Rs 560 per share.

"Amid sustained hiccups and required corrective measures, we take back execution premium from the stock. Dabur has relatively underperformed , and we expect this to continue in the near term," said Emkay Global.

Emkay Global downgraded its rating on Dabur to 'add', from 'buy' earlier, saying any meaningful correction owing to tactical measures may offer entry opportunity, given long term fundamentals fall in place.

In recent quarters, disproportionately higher growth in e-commerce and Q-commerce has resulted in elevated inventory levels hurting the RoI for distributors. In response, the company has made a strategic decision to realign distributor inventories in the GT channel, which has also contributed to a temporary decline in revenue and operating deleverage.

"In our view, while downstocking and a pipeline correction in FMCG is not rare, the extent of impact on Dabur is surprising," said Nuvama Institutional Equities. While the brokerage maintained its buy call, it noted that Dabur India's stock could be under pressure in the near term.

Over the past 12 months, Dabur India shares have risen 12 percent. In comparison, the consumer staples index Nifty FMCG has risen 28 percent.

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