Dabur India Stock Faces Downturn On Mid-Single-Digit Revenue Projection (Image Source: iStockphoto)
On Thursday, the shares of Dabur India closed at Rs 507.25, 4.47 per cent down the previous day’s closing.
The trajectory of Dabur India’s stock took a downturn following the company’s announcement of sluggish demand trends in the March quarter, coupled with a mid-single-digit revenue growth projection. The company’s inorganic revenue growth, propelled by the Badshah acquisition, has now been integrated into the business’s performance metrics.
However, amidst these challenges, there are promising signs in the rural sector, where growth has gained momentum, driven by price rollbacks in staple products. This has led to a narrowing gap between rural and urban consumption patterns. Additionally, with optimistic forecasts for the rabi crop harvest and normal monsoon expectations, Dabur anticipates an uptick in consumption in the forthcoming months.
In terms of segment-wise performance, Dabur foresees high-single-digit growth in the Health, Personal Care (HPC) segment for the fourth quarter, while the healthcare and food & beverage (F&B) segments are expected to register low single-digit growth rates. Notably, the F&B segment’s performance last year had set a high benchmark, while the healthcare portfolio was affected by delayed winter conditions.
The acquisition of Badshah Masala has proven to be a boon, with strong volume-led growth anticipated in the high teens for the fourth quarter. Dabur’s international business, particularly in regions like the Middle East and North Africa (MENA), Egypt, and Turkey, is projected to deliver double-digit growth in constant currency terms. However, currency depreciation in Turkey and Egypt may temper revenue growth when translated into Indian Rupees.
Aligning with its brand investment strategy, Dabur plans to ramp up advertising spending, with operating profits expected to outpace revenue growth. Furthermore, the company anticipates gross margin expansion due to deflation in input costs and other cost-saving measures.
The 52 week high and low of the Dabur India share is Rs 596.90 and Rs 502.55 respectively. In the last 1 year, the shares have given negative returns of over 7 per cent.
