Home / Markets / Mark To Market /  Dabur India impresses in Q3 as volume growth picks up

Dabur India Ltd’s December quarter results are better than Street expectations, although not by a wide margin. What stands out in the results is the company’s India business volume growth of 18.1%. “We view this as a strong performance and better than peers as volume growth of Hindustan Unilever Ltd/Emami Ltd/Marico Ltd stood at 4%/ 13%/15% respectively," said analysts from Dolat Capital Market Pvt. Ltd in a note on Friday.

This is the second consecutive quarter of double-digit volume growth for Dabur with the measure at 16.8% in the September quarter. As such, for the December quarter, revenue from the domestic business performed better, registering a 19.5% year-on-year growth. This was driven by the healthcare segment, which increased 28%. Within this, health supplements saw strong growth of almost 35% driven by robust double-digit growth of Dabur Chyawanprash and Dabur Honey. Market share in the honey category grew by 700 basis points, said the company. One basis point is one-hundredth of a percentage point. Growth in the home and personal care segment was comparatively slower at 16%. Within this segment, oral care grew 28%, which is nothing to sneeze at. The food segment performance was lacklustre with growth at 4.7%.

Dabur India saw double-digit domestic volume growth for the second quarter in a row in Q3FY21
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Dabur India saw double-digit domestic volume growth for the second quarter in a row in Q3FY21

Growth in the international business was slower at 13%. Overall, Dabur’s revenues last quarter rose 16% year-on-year to 2,729 crore, which is higher than 2,628 crore the Street was expecting, according to a Bloomberg poll. Earnings before interest, taxes, depreciation and amortization (Ebitda) margin was flattish at 21%, despite a 38% increase in advertisement and publicity expenses.

Going ahead, increase in raw material prices poses a risk to margins. Further, the company has launched a variety of new products in the past few months and investors would have to watch how revenue contribution is shaping up from the new launches.

Meanwhile, the Dabur stock touched a new 52-week high on 15 January on the NSE, but the shares have corrected since and are now lower than their pre-covid highs seen in February 2020. The stock trades at 47 times estimated earnings for financial year 2022, based on Bloomberg data. “Valuations are not cheap but the company is delivering," said an analyst, requesting anonymity.

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