Dabur India recovers 4% from day's low, trades 2% up despite weak Q4 nos

Shares of Dabur India moved higher by 2 per cent to Rs 439, recovering nearly 4 per cent from the day's low on the BSE on Thursday, despite weak earnings for the quarter ended March 2020 (Q4FY20) on value buying. In the past five weeks, the stock of personal products company has underperformed the market by falling 15 per cent, as compared to a 1 per cent rise in the S&P BSE Sensex.

The stock of Dabur India was down 2 per cent in the early morning deal after it reported a sharp 12 per cent year-on-year (YoY) decline in revenues at Rs 1,865 crore in Q4FY20, led by a higher proportion of non-essential categories and severe impact on the placement of products in March-end. The company’s consolidated profit before depreciation, interest, taxes and the exceptional item (EBITDA) was down 18 per cent YoY at Rs 428 crore, while margin declined to 22.9 per cent from 24.6 per cent in the year-ago quarter.

The management said, as the lockdown restrictions eased gradually, Dabur has been at the forefront of delivering authentic Ayurvedic solutions to meet the emerging Health Care needs of consumers in the post-Covid market.

The demand patterns have changed significantly, with consumers increasingly seeking Ayurveda-based interventions for boosting their immunity, besides products that meet their personal and household hygiene needs. The company already witnessing a 400 per cent surge in demand for flagship immunity booster Dabur Chyawanprash and an 80 per cent growth in Dabur Honey, it added.

The management further said, the impact of Covid-19 in the current quarter i.e. April-June (Q1FY21) revenue from operations (based on the best judgement and normal growth scenario) is likely to be in the range of Rs 400-450 crore. The impact on profit after tax of Q1FY21 is likely to be in the range of Rs 60-80 crore.

While healthcare demand has been strong, the growth outlook for other categories remains mixed with commentary being very cautious, analysts at Emkay Global Financial Services said in result update.

“Dabur’s new CEO has introduced many initiatives such as growing the Healthcare segment, the power brand strategy, and new launches. While these hold promise from a longer-term perspective, earnings growth for FY21E is likely to be weak, continuing the tepid trend of the previous 5 years (7 per cent EPS CAGR). The high wholesale dependence and international business (especially in the MENA region) is also likely to impact top-line growth in the near term,” Motilal Oswal Securities said in result update.