Dabur India Surpasses Q4 Profit Expectations Amidst Robust Domestic Demand and Lower Costs

Dabur India Surpasses Q4 Profit Expectations Amidst Robust Domestic Demand and Lower Costs

THE WHAT?   Dabur India, a prominent player in the consumer goods sector, has reported a notable 16.2% increase in fourth-quarter profit, exceeding analyst expectations due to strong domestic demand and decreased operational costs.

THE DETAILS  For the quarter ending March 2024, Dabur India announced a net profit of 3.50 billion rupees ($41.9 million), up from 3.01 billion rupees the previous year, surpassing the LSEG forecast of 3.44 billion rupees. This growth comes amidst a challenging environment marked by slowing volumes, heightened domestic competition, and ongoing inflationary pressures that have notably affected the consumer goods sector in India.

THE WHY? The company’s revenue saw a modest rise of 5.1% to reach 28.15 billion rupees. A significant contributor to this increase was the consumer care segment, which accounts for 79% of the total revenue and saw a 6% rise during the quarter. Additionally, a 16% reduction in the cost of raw materials significantly bolstered Dabur’s bottom line. Following the announcement, Dabur’s shares experienced a notable increase, climbing by as much as 5.6%, in stark contrast to the overall sector performance.

The broader Indian consumer goods market has faced challenges, including sluggish rural demand and inflation. However, analysts are optimistic about a potential revival in rural spending towards late 2024, buoyed by expected increases in farm incomes from the monsoon season. In contrast to Dabur’s success, competitors such as Hindustan Unilever have reported declines but anticipate a recovery in rural sales, whereas Nestle India also surpassed profit expectations due to strong demand.