Nowadays, investors in fast-moving consumer goods (FMCG) stocks are more focused on volume growth, where it all starts, and less interested in earnings growth. Dabur India Ltd has given them reason to do so as its earnings growth was less than robust. But after Marico Ltd’s healthy 8% volume growth in the September quarter, Dabur India has reported a 7.2% volume growth in the domestic market.

What’s more, Dabur India’s management said this growth has not been led by restocking to replenish the diminished stock pipelines in the run-up to the goods and services tax (GST). It said volume growth in each month of the quarter did vary, but the reported volume growth reflects reviving consumer demand. That’s a strong statement which investors will clutch on to.

That does raise the question of growth taking off in the second half, as it also contains a low base effect thanks to demonetisation. But here, the Dabur India management turns conservative and says it is hopeful but not certain of that. It believes the government may provide a stimulus and spur consumer demand, especially in rural India.

In the September quarter, the company’s India revenues rose by 10.7% on a comparable basis and its international business grew by 3.9% on constant currency basis. Some segments played a more crucial role during the quarter, with oral care, home care and foods leading growth.

Dabur India’s haircare business did not do well, and shampoo sales were hit as it pared down stocks in preparation for a relaunch. This should be temporary and the current quarter should see shampoo sales revive.

While the international business saw 3.9% constant currency growth, currency devaluation saw it lose 5% of sales due to translation losses. Its sales in the Gulf markets were under pressure, falling 4.3%. This part of the company remains a drag on growth.

Overall, its net profit rose by 7.2% on a comparable basis. Reported figures are not comparable, because current period figures are net of all indirect taxes whereas prior period figures include excise duty.

Although net profit growth was relatively low, Dabur India’s shares still rose by 3.6% as investors absorbed the implications of a 7.2% volume growth. That there was no one-off adjustment needed in this number suggests that this can be sustained.

The company’s conservative outlook is understandable considering how volatile the past 12 months have been. If rural demand picks up and the government does its bit to spur demand, then Dabur India’s management may strike a more confident pose after the third quarter results. Investors may turn believers earlier, however.

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