Dabur India hits 52-week low in firm market on sluggish demand in Q4

In past three days, Dabur has 5.5 per cent after the company said its consolidated revenue in Q4 is expected to register mid-single digit growth.

Shares of Dabur India hit a 52-week low of Rs 502.25, down 1 per cent on the BSE in Monday's intra-day trade in an otherwise firm market after the company said the demand trends remained sluggish during the January-March quarter (Q3FY24). In comparison, the S&P BSE Sensex was up 0.6 per cent at 74,706 at 01:56 pm.

Thus far in the calendar year 2024, the stock price of Dabur India has slipped 10 per cent, as against 3.4 per cent rally in the benchmark index.

In past three trading days, the stock slipped 5.5 per cent after Dabur in the Q4FY24 business update on April 4, said its consolidated revenue is expected to register mid-single digit growth. The inorganic revenue growth which was to the extent of around 2.3 per cent till year-to-date December 2023 on account of Badshah acquisition is now factored in the base, the company said.

Dabur said the gross margins are likely to continue to witness expansion on account of deflation in input cost and cost-saving initiatives. In line with the strategy to invest behind brands the company said it will see higher A&P spends. The operating profit is expected to grow slightly ahead of the revenue and post an improvement in Y-o-Y operating margins.

While the past year was challenging in terms of consumer demand, the management expects improvement in consumption going forward as macro-economic indicators continue to be robust.

Meanwhile, in India business, home and personal care (HPC) segment is expected to grow in high single digits. Healthcare and food and beverage (F&B) segments are expected to register low single digit growth. F&B had a high base last year and the healthcare portfolio was impacted due to the delayed winter.

Badshah Masala continued to perform well and is expected to post strong volume led growth in the high teens. The company said it continued to gain market share across its categories driven by strong execution in the market.

International Business is expected to register double-digit growth in constant currency terms, led by good momentum in The Middle East and North Africa (MENA) region, Egypt & Turkey. However, due to the impact of currency' depreciation in Turkey and Egypt the translated revenue in INR terms will show growth in mid single digits, Dabur India said.

Overall fast moving consumer goods (FMCG) industry demand trends continued to remain sluggish during Q4FY24, however rural markets witnessed an improvement led by price cuts in staples, due to which the gap between growth rates in rural and urban markets are narrowing gradually, according to InCred Equities.

The brokerage firm expects Dabur’s consolidated sales to grow 6.1 per cent YoY in Q4FY24F and gross margin expansion of 210bp YoY to 47.9 per cent aided by moderation of input costs. Higher ad spends and other expenses are expected to limit EBITDA margin expansion at 50bp YoY to 15.8 per cent (implying a 19.2 per cent EBITDA margin for FY24F, slightly below management guidance of 19.5 per cent), InCred Equities said.