Dabur expects rise in Q1 sales as easing inflation boosts spending

Dabur India Ltd said on Thursday it estimated that first-quarter sales increased more than 10%, as easing inflation allowed customers to spend more on the consumer goods company’s products.

Demand trends in both urban and rural India improved during the quarter ended June 2023, Dabur said.

The country’s annual retail inflation cooled to a more than two-year low in May as cost pressures on food eased, making room for people to spend more on consumer products.

Easing inflation is expected to lead to year-on-year expansion in gross margin in the quarter, according to the company, which makes products such as Dabur Red toothpaste and Real Activ packaged juice.

Dabur also expects the improvement in gross margin to continue for the full year.

Earlier this week, rivals Godrej Consumer Products, Marico and Adani Wilmar released a mixed bag of quarterly estimates.

While Godrej Consumer estimated its sales rose in the double-digit percentage range during the quarter, Adani Wilmar and Marico estimated their sales in the three months took a hit.

Dabur’s international business – comprising 25.1% of its total sales last fiscal year – is expected to report double-digit sales growth in the first quarter, the firm said.

Its India business is expected to post high single-digit growth.

The domestic healthcare and home and personal care segments are also projected to grow in double digits, backed by mid-single-digit volume growth. The two segments combined contributed close to 80% of total domestic sales last year.

Unseasonal rains and a moderate summer, however, led to a muted quarter for the company’s food and beverages segment, it added.

Dabur expects growth in its profit after tax to be lower than growth in its operating profit due to expenses related to its acquisition of spices and seasoning maker Badshah Masala.

Shares of Dabur are up 5.4% so far this year, underperforming the Nifty FMCG index, which is up 21.72%.