Dabur said in a third-quarter report on Thursday that it anticipates consolidated sales to climb in the mid to high single digits, a small improvement over the July-September period.
The company which is the producer of Real juice, Homemade sauces, and Chyawanprash stated in a stock exchange filing that its foods and beverages business, which is often the greatest performer in the October-December quarter owing to the holiday season, will lead growth in the period.
Dabur said the third quarter exceeded expectations, thanks in part to the acquired Badshah Masala chain and its operations across the globe.
However, the firm, which gets almost half of its yearly revenues from rural India, stated that demand in the hinterland remains a worry. Rural demand has remained behind urban demand, although the gap has narrowed in the recent quarter. Analysts predict that demand will be poor in the December quarter.
Despite lower inflation in diesel and fertiliser costs, which indicates well for the rural sector, volume growth for most players will be tough in the December quarter, and possibly even the fourth quarter, according to Abneesh Roy, executive director of Nuvama Institutional Equities, in a report this week.
Dabur indicated that gross margins are projected to rise across India, driven by moderating inflation and cost-cutting actions, and that a large percentage of gross margin expansion would be funnelled into increasing advertising and promotion spending. As a result, operational profit is forecast to expand somewhat faster than revenue, with operating margins improving year on year.
The business expects its foods and drinks segment to expand in the high single digits, while its home and personal care portfolio, which includes Vatika shampoo, will rise in the mid to single digits.
“Because of the delay in onset of the winter season, the health care business is expected to grow in low to mid single digits,” Dabur said in its filing.
In an update, Dabur stated that the acquisition of the Badshah masala franchise will help volume growth and that the brand may lead to significant volume-led growth in the high twenties.
“The international business is expected to register double-digit growth in constant currency terms, led by good momentum,” Dabur noted.
