Dabur India expects low to mid single-digit revenue growth in Q3

Dabur India expects a "low to mid single- digit revenue growth" for the quarter ended December 2022 on account of the challenging macroeconomic environment and muted category growth during the period.

However, the homegrown FMCG major said inflation started to cool off during the quarter and as a result, gross margins would be marginally better sequentially on a consolidated basis.

"Overall, the consolidated revenue is expected to report low to mid single-digit growth," Dabur said in an update for Q3 FY23.

During the December quarter, the demand trends for the FMCG industry remained "weak" with rural markets continuing to remain under pressure and this was further accentuated by the late onset of winter in North India, it said.

However, early signs of moderate recovery were visible towards the latter part of the quarter coupled with some abatement in inflation.

"The improving macroeconomic environment, positive steps being taken by the government and the expected stimulus of the upcoming Union Budget should help speed up the recovery of the industry," said Dabur.

In the domestic market, Dabur's healthcare portfolio returned to a positive growth trajectory, however, it is still navigating high bases of the pandemic, while F&B business continues to trend well, the company said.

"During the quarter, F&B's growth will see some moderation on account of the early onset of the festive season," it said.

Sales from modern trade channels and e-commerce continued to report double-digit growth during the period.

Moreover, rural markets showed early signs of recovery towards the end of the quarter and could be further bolstered by the upcoming harvest season, MSPs and expected spending by the government, the company said.

Its international business is expected to post double-digit revenue growth during the quarter in constant currency.

"However, due to currency headwinds in Turkey and Egypt, the reported growth in INR would be impacted," said Dabur.

The adverse currency movements in international business and inflation will lead to near-term impact on operating margin, which is expected to be lower by 200-250 basis points as compared to Q3 FY22, it added.

In the update, Dabur India has provided an overall summary of the performance and demand trends witnessed during the quarter ended December 31, 2022.

"This will be followed by detailed financial results and earnings presentation once Board of Directors of the company approves the consolidated and standalone financial results for the quarter ended December 31, 2022," it added.