FMCG firm Dabur reported third-quarter profit largely in line with analysts’ estimates on Thursday, as the demand boost from GST rate cuts offset the one-time charge from new labour codes. Dabur saw December-quarter net profit rise 7.2% year-on-year to Rs 560 crore, which compares favourably with Bloomberg consensus estimates of Rs 556 crore for the period.
Earnings before interest, tax, depreciation, and amortisation (Ebitda) grew 7.7% year-on-year to Rs 734 crore, meeting street estimates of Rs 723 crore. Ebitda margins came in at 20.6% in Q3 versus 20.3% reported last year.
“As demand improves and recent goods and services tax cuts offer additional support, Dabur is well-positioned for the coming quarters,” CEO Mohit Malhotra said in a statement.
GST Tailwind
The GST cut implemented in September last year boosted demand for Dabur, and the company expects the effect to continue into the coming quarters, as 60% of its portfolio that was taxed at 12% and 18% is now taxed at 5%.
The India business reported 6% growth in Q3, while international business grew 11.1% during the period, led by Turkey, the MENA (Middle East North Africa) region, the US, and Bangladesh. Dabur also reported a 131 bps gain in the air freshener market share, taking its total share to 44%.
Sales of Dabur’s honey and other products such as toothpaste, hair oils, and coconut water grew in double digits, the company said in a business update earlier this month.
“We have sharpened our competitive edge through stronger innovation and focused brand building, leading to healthy market share gains. We remain confident of delivering sustainable growth, resilient profitability, and continued shareholder value,” Malhotra said.
Dabur said its total reach – urban and rural combined – has expanded by 50,000 outlets, making it the second most distributed company in India, with products now reaching over 8.5 million outlets. Its rural distribution network covers over 133,000 villages, it said.
Rural Resilience
Rural demand continued to outperform urban markets for the eighth consecutive quarter, with syndicated data showing a gap of 330 basis points between urban and rural markets. Dabur’s internal numbers reflected a similar trend, with rural growth outpacing urban India, the firm said.