NEW DELHI:
Dabur India
’s shares dropped by as much as 7.8 per cent on Thursday following company’s first
revenue decline
in four years, in its first quarterly prediction. The
consumer goods
giant attributed this decline to weak demand in the
food and beverages
sector.
The stock was last down 5.4 per cent, heading for its worst day since mid-March 2022, and it was the biggest loser on the
Nifty FMCG
index, which fell by 1 per cent.
According to LSEG data, this would mark the company’s first decline in revenue since the quarter ended June 2020.
Dabur said that it expects revenue to fall somewhere in the mid-single digit percentage range for the quarter that ended on September 30 as its “out of home consumption” was impacted by heavy rain and floods across parts of the country.
Almost 30 per cent of Dabur’s revenue is supported by its food and beverage segment.
According to analysts at Antique Stock Broking, the company dealt with
inventory buildup
and had to reduce channel inventory to boost distributor interest.
Furthermore, Dabur had sustained its investment in brands that led its
operating margin
to decrease to a mid-to-high teen percentage.
Emkay Research analysts said that compared to its rivals, Dabur has “relatively underperformed” and the underperformance might continue in the near term.
Consumer goods company, Marico, stated that it expects second-quarter consolidated revenue to grow in high single-digit percentage.
Though destocking might be a one quarter phenomenon, it materially influences Dabur’s fiscal year 2025 growth and margin outlook, Systematix Institutional Equities analysts said.
