Dabur Q1 Results: A Mixed Bag for Investors Amidst Challenging Market Conditions
Dabur India Ltd. reported a 3% rise in consolidated net profit for the June quarter, in line with expectations. The company posted a profit of Rs 514 crore in the first quarter as compared to Rs 500.1 crore in the year-ago period, according to an exchange filing on Thursday.
Revenue and Ebitda Growth
Revenue increased by 1.7% to Rs 3,404.58 crore versus Rs 3,349.11 crore in the corresponding quarter last year. The growth in revenue was driven by the company’s expansion of its distribution footprint, with direct reach increasing by 63,000 outlets year-on-year. Net profit rose by 3% to Rs 513.91 crore, while Ebitda increased by 2% to Rs 667.82 crore.
Margin Performance
The company’s margin performance was flat at 19.6%, which is in line with expectations. The margin performance was impacted by the increase in raw material costs, which was partially offset by the company’s cost-saving initiatives.
International Business
Dabur’s international business saw a 13.7% growth in constant currency terms, driven by strong performances in the UK, Turkey, and sub-Saharan Africa. The UK business reported a 41% growth, while the Turkey business grew by 36%. The company’s sub-Saharan African section grew 20%, and the Middle East and North Africa sector saw a 10.1% growth.
Rural Market Performance
Rural markets outperformed urban ones for five straight quarters, according to a press release from the firm. The company’s village coverage expanded by around 10,000 villages, numbering up to 1.33 lakh villages. This expansion is expected to drive future growth for the company.
Market Share Gains
The company saw market-share gains across 95% of its portfolio, which is a positive sign for investors. The company’s strong brand presence and distribution network have enabled it to gain market share in a competitive environment.
Stock Performance
Shares of Dabur closed 1.34% higher at Rs 529 apiece on the NSE, compared to a 0.35% fall in the benchmark Nifty. The stock has fallen 1.66% in the last 12 months and fallen 16.78% on a year-to-date basis. Out of 41 analysts tracking the company, 15 have a ‘buy’ rating on the stock, 18 recommend ‘hold’ and eight suggest ‘sell’, according to Bloomberg data.
Investor Takeaway
The Q1 results of Dabur India Ltd. are a mixed bag for investors. While the company’s revenue and net profit growth were in line with expectations, the margin performance was flat. The company’s international business and rural market performance were strong, which is a positive sign for investors. However, the stock’s performance has been weak in the last 12 months, and investors will be closely watching the company’s future growth prospects.
For investors looking to invest in the FMCG sector, Dabur India Ltd. is a good option due to its strong brand presence and distribution network. However, investors should be cautious of the challenging market conditions and the company’s margin performance. It is recommended that investors do their own research and consult with a financial advisor before making any investment decisions.
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