Dabur India Ltd - Update for Quarter Septeniber 30, 2022 - Q2 FY23

This update provides an overall summary of the performance and demand trends witnessed during the quarter ended September 30, 2022 (Q2 FY23). This will be followed by detailed financial results and earnings presentation once the Board of Directors of the Company approves the consolidated and standalone financial results for the quarter ended September 30, 2022.

Geopolitical situation continued to impact the business with unprecedented inflation during the quarter. This led to weak demand trends across categories. Urban markets were driven by modern trade and ecommerce which saw double-digit growth. Rural markets witnessed some pressure in terms of liquidity. Going forward, moderating inflation and festive season should support consumption growth in the second half of the fiscal.

Despite the challenges posed by macro-economic situation, Dabur's India business had a steady performance and is expected to report revenue growth in mid-single digits. Food & Beverages vertical continued to lead with robust double-digit growth on a high base of 43% growth in Q2FY22. Home and Personal Care portfolio is expected to record mid-single digit growth on a high base of 16.7% growth in Q2FY22. Healthcare vertical is expected to report a hear double-digit growth in terms of 3-year CAGR but will see a muted performance during the quarter on the back of high Covid base.

International Business is expected to post double-digit revenue growth in constant currency. However, some of our markets like Turkey and Egypt continued to see currency devaluation during the quarter impacting the translated growth.

Overall, the consolidated revenue is expected to grow at mid-single digit. We continue to grow ahead of category growths and gain market share in most of our segments, both in domestic and overseas markets.

During the quarter inflation was at peak levels which impacted gross margins. The input cost pressure led to a near term impact on operating margin which is expected to be lower by around 150-200 bps as compared to Q2 FY22 but will see sequential improvement. With commodity prices easing, inflation is expected to ease in H2 FY22 leading to y-o-y improvement in operating margins.

The company continues on the trajectory of outperforming the industry. We continue to invest strongly behind Power Brands, Innovation, Digitization, A&P, distribution expansion and a strong back end which will enable us to achieve profitable and sustainable growth.

Source : Equity Bulls

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DaburIndia BusinessUpdate Q2FY23