Dabur hits 52-week low; slips 10% in one week on disappointing Q4 results

Shares of Dabur India hit a 52-week low of Rs 499.35, falling 1 per cent on the BSE in Tuesday’s intra-day trade. The shares have declined 10 per cent in the past one week after the company reported a disappointing set of numbers for March quarter (Q4FY22).

The stock of the personal care products company fell below its previous low of Rs 502 touched on March 3, 2022. At 12:03 pm; Dabur India was trading 0.26 per cent lower at Rs 503.15, as compared to a 0.5 per cent rise in the S&P BSE Sensex.

For Q4FY22, Dabur India reported a 21.98 per cent year on year (YoY) decline in consolidated net profit at Rs 294 crore, due to higher input and impairment cost.

The company posted exceptional items of Rs 85 crore during the quarter, on account of impairment of goodwill of Turkey business due to steep devaluation of Turkish Lira. The company had posted a net profit of Rs 377 crore in Q4FY21.

Its revenue from operations rose 7.74 per cent to Rs 2,518 crore during the quarter under review, as against Rs 2,337 crore in the year-ago period. Consolidated operating margin contracted by 90 bps at 18.0 per cent as compared to 18.9 per cent primarily due to high material inflation.

The company’s revenue growth was impacted by the slowdown in rural demand. While the rural overhang will continue in H1FY23, with good monsoon predictions, rural demand can improve in H2FY23.

Dabur is amongst the best companies to manage its margins in high inflation environments, given its diversified product, RM portfolio, and the limited sensitivity of raw materials vs. peers. Thereby, we do not expect a material impact on EBITDA margin in FY23 (high base of other expenses and cut-down in A&P to support), said analysts at HDFC Securities in a result update.

Though commodity inflation has impacted consumer sentiments & margins in near term, Dabur India could benefit from high growth in agri-economy due to increasing agri exports & in turn expected improvement in rural growth.

It can increase the addressable market by diversifying in categories like fruit drinks, health foods (under Real brand), herbs & baby products under Dabur brand & extending Chyawanprash, Honey into new variants, said analysts at ICICI Securities.