Dabur India shares gain as net profit rise 3% in Q2

Dabur India share price gained over one percent in early trade on November 3 as the FMCG player reported a consolidated net profit of Rs 507.04 crore for the second quarter of FY24, higher by 3.29 percent year-on-year.

Morgan Stanley said that the earnings were in-line, with urban growth outpacing rural growth and that signs of recovery in October were positive. Dabur witnessed market share gains across 90 percent of its portfolio.

The profit was higher on steady performances from the home & personal care (HPC) segment, along with the healthcare business, said the company.

Revenue came in at Rs 3,203.84 crore, up 7.27 percent from Rs 2,986.49 crore in the year-ago quarter. Sequentially, the revenue increased 2.34 percent.

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However, Motilal Oswal noted that compared to the industry, Dabur has demonstrated a faster rural recovery, with nearly half of its domestic sales originating from rural markets. “Strengthening distribution infrastructure and fostering innovation are expected to further boost the company’s growth momentum,” the domestic brokerage added.

Digestives and OTC drove growth in the healthcare business. In the Healthcare space, Dabur reported market share gains in Chyawanprash, Honey, Glucose and Baby Care segments. Double-digit growth, market share gains for Odomos, Odonil and overall Homecare as a category being under-penetrated led to growth in HPC.

International business grew 23.6 percent YoY in CC terms and 10.4 percent YoY in INR terms.

As a percentage of sales, higher ad-spends (up 170 bps YoY to 6.8 percent), lower other expenses (down 60 bps YoY) and stable staff costs restricted EBITDA margin expansion by 160 bps to 21.8 percent, said Motilal Oswal.

Also Read | Dabur India spent Rs 65 cr in legal costs as hair relaxer cancer case continues in US

Dabur India has spent around Rs 60-65 crore in legal costs in H1FY24 in the ongoing case regarding its hair relaxer, which customers claim has caused ovarian cancer, the Dabur India management said in its investor conference call.

Going forward, the anticipated legal expenses are expected to range between Rs 20 crore and Rs 22 crore per quarter. Dabur has product liability insurance in place if any legal liability arises due to the legal issue. However, the company believes the case has no merits.

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