Dabur sees early signs of rural recovery, enters talcum powder market

New Delhi: Dabur India on Thursday pointed to early signs of an uptick in rural demand, citing market data, and said forecasts for a normal monsoon could further bolster rural consumption in the months ahead.

Additionally, the company has projected a mid-to-high single-digit volume growth in the ongoing financial year, the company’s management said at its post-earnings conference call.

“Rural growth is kind of coming back, in Nielsen data we have seen 120-150 bps improvement in rural areas. Urban growth almost remains same or has come down a little bit, but rural growth is kind of picking up; that's happening sequentially in the last two to three months...So after almost three years, we are seeing rural ahead of urban. We hope it’s more structural in nature and not a one-off,” Dabur India chief executive officer Mohit Malhotra said.

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For Dabur, rural markets grew 400 basis points (bps) ahead of urban markets in the March quarter. On Thursday, the company reported a 16.2% jump in quarterly net profit to ₹350 crore, up from ₹301 crore a year earlier. Revenue in the three months through March stood at ₹2,815 crore, up 5.1% from a year earlier. Dabur India FMCG business posted a volume growth of 4.2% for the quarter.

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One basis point is one-hundredth of a percentage point.

Dabur’s home & personal care business grew 8.7% in March quarter

Dabur’s home and personal care business grew 8.7% year-on-year in the March quarter, while the food and beverages was flat. Healthcare business was down 1.5% in the same period.

Malhotra said government spending on infrastructure and projections of a normal monsoon could hold rural growth in strong stead going forward. "In three years’ time, rural has just come back in the last 2-3 months. If these numbers are anything to go by, I think rural recovery should continue because it was such a long hiatus of rural lagging urban…organized players generally get better dividends when this happens, because we have better infrastructure investments in place," he added.

The company also announced its entry into several new categories, including expanding its chyawanprash brand into the powder and gummy format. Dabur is also set to enter the talcum powder category this summer, with its Dabur Cool King brand competing with the likes of Emami Ltd. The company is also set to foray into breakfast cereals under the Dabur Honey brand.

Meanwhile, Malhotra said the company will chase greater volume growth this fiscal. The company clocked a 5.5% volume growth in its India business in the fiscal year ended 31 March.

“If we have to grow, volume growth is mandatory. As far as our annual operating plans are concerned, we've taken a target of mid-to-high single digit volume growth…We need to increase our penetration. We are already there in eight out of 10 households, with 80% penetration. If we want our entire portfolio to go to every house, volume growth is something that we have to do. So, I think volume growth will be the way forward,” Malhotra said.

For the full fiscal year, Dabur India’s consolidated revenue rose 7.6% and crossed the ₹12,000-crore mark for the first time to end the year at ₹12,404 crore. Consolidated net profit for 2023-24 increased 7.9% to ₹1,843 crore.