Dabur India Ltd., one of India’s leading FMCG companies, has released a business update for the quarter ending September 30, 2024 (Q2 FY25). Despite witnessing some improvement in demand trends, Dabur faced challenges due to heavy rain and floods across parts of the country, which impacted out-of-home consumption and consumer offtake, particularly in the beverage category.
In recent quarters, the company has observed a significant growth in organized channels such as Modern Trade (MT), Ecommerce, and Quick Commerce. However, this has resulted in increased inventory levels in the General Trade (GT) channel, affecting distributor Return on Investment (ROI). In response, Dabur has strategically decided to correct distributor inventory in the GT channel to improve ROI, a move deemed essential for the long-term health and sustainability of the business.
Due to this inventory correction, Dabur anticipates a mid-single digit decline in consolidated revenue for the quarter. This decline is primarily attributed to the Indian market, while international business is expected to show double-digit constant currency growth. Notably, Badshah Masala has continued to perform well, recording double-digit growth during the quarter.
Despite the decline in primary sales, Dabur continued its investments in advertising and promotion (A&P). However, these investments, along with deleverage, are expected to impact profitability, leading to an operating margin decline in the range of mid to high teens for the quarter.
Looking ahead, Dabur remains committed to investing in marketing, media initiatives, distribution infrastructure, and backend capabilities. The company expects revenue growth to revive from October 2024 onwards, driven by streamlined GT channel operations and strong momentum in alternate channels.
Dabur also announced an improvement in its Dow Jones Sustainability Index (DJSI) score, which increased from 72 to 81, reflecting the company’s commitment to sustainability and responsible governance. This 170% improvement over the past two years underscores Dabur’s strategic initiatives in enhancing environmental stewardship, social responsibility, and robust governance practices.
