Dabur volumes to remain under pressure, says global CEO Mohit Malhotra

Volumes will remain under pressure as macroeconomic factors, such as raw material costs and the monsoon, have become key levers determining growth, said Dabur India's global chief executive Mohit Malhotra in a post-earnings conference call on Wednesday.

“Price growth and value growth are becoming higher as compared to the volume growth,” he added.

Dabur India, which sells products including honey, hair oil, toothpaste, Odonil home care goods, and Réal Fruit juices, reported 5% volume growth in the June quarter, down from 6% domestic volume growth in the March quarter, which had marked its highest quarterly growth in 18 quarters.

It posted a consolidated net profit of ₹586.16 crore in the June quarter, up 15% year-on-year. Its consolidated revenue came at ₹3,764.3 crore, up 10.5% on-year.

“This marks the third straight quarter of double-digit profit growth for Dabur. The quarter unfolded against a backdrop of persistent inflationary pressures, heightened geopolitical uncertainties in the MENA (Middle East and North Africa) region, and volatile commodity markets," said Malhotra in a press statement.

Dabur's operating profit stood at ₹741.4 crore, up 11% on-year. The company reported operating margin of 19.7%, up 10 basis points from a year ago.

To be sure, in May, the packaged consumer goods company said it had raised prices by up to 4% and reduced pack sizes to offset rising inflation and input costs.

“Historically, the company's price increases have caused minimal demand destruction, with volumes remaining resilient or expanding marginally,” analysts Suhas Poojary, Tanish Shah and Meet Mewada of Sunrise Gilts & Securities told Mint.

“This demand stability is driven by a two-pronged strategy: maintaining rural affordability via shrinkflation while capitalizing on urban premiumization,” they added.

Rural markets and monsoon

Malhotra said that rural India continues to be a bright spot in the consumption landscape, outperforming urban markets for the eighth consecutive quarter.

Dabur said that syndicated data showed rural demand outpaced urban demand by 170 basis points in the first quarter, growing 6.2% versus 4.6% in urban markets.

“While the inflation is picking up, that's a little concern, but the government is offering a lot of swaps in terms of minimum selling price (MSP), and I think we should be able to navigate the season and the full year also on the back of good rural and also decent urban growth,” Malhotra said.

India's retail inflation rose to 4.38% in June, up from 3.93% in May, crossing the Reserve Bank of India's 4% target. In May, the Union government hiked MSP of 14 Kharif crops including paddy, cotton and sunflower seeds for the 2026-27 marketing season.

The company’s glucose and juices portfolio was affected by unseasonal rainfall in the first half of the quarter. The businesses made a strong comeback in May and June.

Dabur’s recently launched new-age nutraceutical brand Siens grew 3x during the quarter.

Dabur’s acquired brand, Badshah, also continued to grow. Dabur acquired a majority stake in the spices business in October 2022 for ₹587.52 crore. “We've expanded beyond Gujarat and Maharashtra to Madhya Pradesh, Rajasthan, and now to Delhi-NCR,” said Malhotra. The brand was present in two markets earlier.