Active Stocks
Thu Mar 28 2024 15:59:33
  1. Tata Steel share price
  2. 155.90 2.00%
  1. ICICI Bank share price
  2. 1,095.75 1.08%
  1. HDFC Bank share price
  2. 1,448.20 0.52%
  1. ITC share price
  2. 428.55 0.13%
  1. Power Grid Corporation Of India share price
  2. 277.05 2.21%
Business News/ Market / Mark-to-market/  Dabur’s September quarter results miss estimates on weak sales growth
BackBack

Dabur’s September quarter results miss estimates on weak sales growth

Dabur's sales growth in future quarters could come at the expense of profit margins

Graphic: Subrata Jana/MintPremium
Graphic: Subrata Jana/Mint

Dabur India Ltd’s September quarter was similar to the preceding one as weak demand continued to drag performance.

The firm had to contend with lacklustre sales across regions and most product categories.

So, the quarter’s consolidated net revenue rose by just 1% to Rs1,981.5 crore from a year ago. This fell short of Bloomberg’s 18-broker average revenue estimate by 9%.

Arresting the growth was its healthcare portfolio, where revenue declined by 3.7% year-on-year (y-o-y).

Premier products such as honey and digestives, too, clocked more or less flat growth, perhaps due to the high base set by the year-ago period.

Surprisingly, even in the hair oils category, which comprises about one-fifth of revenue, the firm failed to match expectations. However, oral and skin care products did a tad better.

Also see | Dabur goes back to basics to take on Patanjali

Fortunately, the foods business, again a significant component in revenue, shored up overall performance on the back of a strong 15.7% sales growth from a year earlier.

Dabur’s management is concerned about the stress on sales due to sluggish demand and high competition across segments. So far, a tight cost control has helped sustain operating margin at the year-ago level of 20.6%. Although advertising spending declined, it is likely that the same would increase in the near term to push sales and market share.

In other words, sales growth in future quarters could come at the expense of profit margins.

For the quarter, weak sales also trickled down to a meagre 5% expansion in net profit from a year ago which came below what analysts’ estimated.

With growth rates cooling off since the beginning of FY17, Dabur’s shares have been trending lower steadily. The September quarter’s performance was not impressive, in spite of hopes that a good monsoon and a rise in incomes could push up demand and expand sales. Even revenue from international business contracted by 2.3% as currency depreciation in West Asia and the African region impacted growth.

These challenges and concerns both on domestic and international markets are unlikely to ebb in the near term.

Unlock a world of Benefits! From insightful newsletters to real-time stock tracking, breaking news and a personalized newsfeed – it's all here, just a click away! Login Now!

Catch all the Business News, Market News, Breaking News Events and Latest News Updates on Live Mint. Download The Mint News App to get Daily Market Updates.
More Less
Published: 27 Oct 2016, 12:17 AM IST
Next Story footLogo
Recommended For You
Switch to the Mint app for fast and personalized news - Get App