FMCG major Dabur Indiaon Friday said it expects its India business to report low to mid-single digit revenue growth on the back of a challenging macro-economic environment and muted category growth in the third quarter. However, it added that early signs of recovery were visible in rural markets towards the end of the quarter.
It added that consolidated revenue is also expected to report low to mid-single digit growth in the quarter ended December 31. Gross margins are also expected to be “marginally better” sequentially due to some cooling off in terms of inflationary pressures, the company said.
“Demand trends for the industry remained weak during Q3 FY23 with rural markets continuing to remain under pressure. This was further accentuated by the late onset of winter in north India. However, early signs of moderate recovery were visible towards the latter part of the quarter coupled with some abatement in inflation,” Dabur India said in a BSE filing.
The FMCG major expressed optimism that factors such as improving macroeconomic environment, positive steps being taken by the government and the expected stimulus of the upcoming Union Budget is likely to help speed up the recovery of the industry.
“Rural markets showed early signs of recovery towards the end of the quarter and could be further bolstered by the upcoming harvest season, MSPs and expected spending by the government,” the company added.
Outlining growth trends of categories, Dabur India said its healthcare portfolio returned to a positive growth trajectory. “Continuing the trend of double-digit CAGRs of the business in H1 FY23, the 3-year CAGRs in this quarter will be in high single digits for HPC and Healthcare and double digits for Food & Beverages,” it added.
Modern trade and e-commerce channels continued to report double-digit growth.
International Business
The FMCG company expects its international business to post double-digit revenue growth during the quarter in constant currency. However, due to currency headwinds in Turkey and Egypt, the reported growth in rupee would be impacted, it added.
“The adverse currency movements in international business and inflation will lead to near term impact on operating margin, which is expected to be lower by 200-250 bps as compared to Q3 FY22,” the company added.
In its regulatory filing, Dabur India said it continues to invest strongly behind its power brands, innovation and distribution expansion to improve its market shares and achieve profitable and sustainable growth.