Ghaziabad-based Dabur India on Thursday emerged as the third fast moving consumer goods (FMCG) company in a week to allude to an improvement in consumer demand for the quarter ended March 31, 2023.

The company released its quarterly update for the period, where it said that the demand trajectory across both urban and rural markets in India had shown an improvement sequentially, although it fell short of a full recovery. The company also said that increased spends behind its brands would result in short-term pressure on operating margins. For the March quarter of FY23, Dabur said its operating margins would be lower by 200-250 basis points as compared to Q4FY22.

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Revenue growth for the quarter, both at the consolidated and at the India business level, would be in mid-single digits in Q4, the company said. Dabur derives around 72% of its consolidated revenue from domestic operations, while 25% comes from its international business and three per cent from exports.

Within the India FMCG business, food & beverages would report strong double-digit growth in Q4, while healthcare would be positive despite a high base reported last year and home & personal care would see low single-digit growth for the period, Dabur said.

“While urban markets have returned to positive volume growth, rural markets still remain muted. Despite near-term consumption pressure, there are some green shoots which are emerging such as moderating inflation, improving consumer confidence and increase in government spending,” the company said.

Peers such as Marico and Godrej Consumer (GCPL) have in the last few days said that easing of broader commodity inflation augured well for overall consumption trends in the FMCG market. The companies said that gross margins were expected to expand and drive reasonable growth in operating profit for the March quarter.

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Dabur said that its India business gross margins were expected to show an improvement in Q4. But consolidated gross margins would be impacted mainly due to currency headwinds in its international business. The company has operations in markets such as Egypt, Turkey and the Middle East.