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View Promises →Dabur India Limited — Q2 FY25
Dabur's Q2 FY25 consolidated revenue declined 5.5% YoY due to a one-time inventory correction in general trade, aimed at improving distributor profitability.
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Dabur's Q2 FY25 consolidated revenue declined 5.5% YoY due to a one-time inventory correction in general trade, aimed at improving distributor profitability. Secondary sales grew 2.3%, with home & personal care up 6% and healthcare up 4%. Gross margins expanded 102 bps, but operating profit fell 16.4% due to revenue deleverage and higher A&P spend (7.4% of sales vs 6.8%). International business grew 13% in constant currency. Management expects H2 growth to return to mid-to-high single digits, driven by rural resilience, festive season, and winter portfolio. Key risks include sustained food inflation impacting urban demand and competitive intensity in beverages from carbonated drinks.
डाबर की दूसरी तिमाही (Q2 FY25) में कुल बिक्री पिछले साल से 5.5% कम हुई। इसकी वजह थी दुकानदारों के मुनाफे को बेहतर बनाने के लिए एक बार का स्टॉक सुधार। हालांकि, दुकानों से असली बिक्री 2.3% बढ़ी, जिसमें घरेलू और निजी देखभाल 6% और स्वास्थ्य उत्पाद 4% बढ़े। कच्चे माल की लागत कम होने से मुनाफे का अंतर बढ़ा, लेकिन बिक्री कम होने और विज्ञापन पर ज्यादा खर्च (बिक्री का 7.4% बनाम 6.8%) के कारण कुल मुनाफा 16.4% गिरा। विदेशी कारोबार 13% बढ़ा। कंपनी को उम्मीद है कि दूसरी छमाही में गांवों की मांग, त्योहारों और सर्दियों के उत्पादों से बिक्री 5-9% तक बढ़ेगी। लेकिन शहरों में खाने-पीने की महंगाई और कोल्ड ड्रिंक्स से मुकाबला चुनौती है।
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Sustained food inflation impacting urban demand
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Read Transcript →Quarter Snapshot
Secondary Sales Growth
2.3%
+2.3% YoY
Secondary sales grew 2.3% YoY, with home & personal care up 6% and healthcare up 4%.
International Business Growth (CC)
13%
+13% YoY
International business registered strong growth of 13% in constant currency terms.
Distributor Inventory Days
21 days
-9 days
Inventory reduced from 30 days to 21 days post-correction; target is 19 days by December.
Chyawanprash Secondary Growth
12.6%
+12.6% YoY
Chyawanprash secondary sales grew 12.6% driven by monsoon campaign; market share reached 61%.
What Changed vs Last Quarter
NEW
H2 FY25 revenue growth of mid-to-high single digits
Management expects second-half revenue growth to return to mid-to-high single digits, subject to good winters and normal FMCG demand.
NEW
Distributor inventory target of 19 days by December 2024
Management aims to reduce distributor inventory from 21 days to around 19 days by end of December 2024.
NEW
Sesa acquisition to deliver 18-19% operating margin post-synergies
Post-merger, Sesa's operating margin is expected to inch up to 18-19%, similar to Dabur, once synergies are realized.
UPDATED
Home care portfolio to reach INR 1,000 crore in 2-3 years
Management expects the home care portfolio to grow from INR 700 crore to INR 1,000 crore in a two- to three-year time frame.
DROPPED
Volume growth expected to improve sequentially
Management expects volume growth to continue picking up in subsequent quarters, driven by rural recovery and government spending.
DROPPED
Gross margin improvement of 120 bps partly reinvested
Around 80% of gross margin gains will be reinvested into advertising and promotion, with balance flowing to operating margin.
DROPPED
Legal costs for Namaste case to reduce
Legal costs expected to be ~INR 80 crore for FY25 vs INR 100 crore last year, with potential insurance recovery of 50%.
NEW RISK
Sustained food inflation impacting urban demand
High food inflation (~9%) is shifting consumer spending from discretionary to essentials, potentially delaying urban recovery.
NEW RISK
Competitive intensity from carbonated drinks in beverages
Price gap between juices and carbonated drinks (e.g., Campa Cola at INR 45/liter vs Real at INR 130/liter) is causing category decline and may persist.
NEW RISK
Channel conflict with general trade due to direct supply to quick commerce
Distributors are unhappy with Dabur supplying directly to quick commerce players, potentially affecting GT relationships and margins.
RISK GONE
Intense competition in hair oils
Bajaj and Emami have become aggressive in coconut oil, leading to margin squeeze and price corrections. Dabur's Sarson Amla underperformed due to softening mustard oil prices.
RISK GONE
Pricing pressure in juices/nectars from cola wars
Price premium of nectars vs colas widened from 2.2x to 3.2x due to aggressive pricing by new cola entrants, impacting nectar growth despite market share gains.
RISK GONE
South India remains under pressure
While rural recovery is visible in UP, Bihar, and Central India, South India continues to face demand weakness, which could weigh on overall growth.
🤫 Topics management stopped discussing
Mentioned in Q1 FY25, Q3 FY24, Q4 FY24
Legal costs expected to be ~INR 80 crore for FY25 vs INR 100 crore last year, with potential insurance recovery of 50%.
Mentioned in Q2 FY24, Q3 FY24
Direct distribution reach to increase from 1.42 million to 1.5 million outlets by end of FY24.
Mentioned in Q1 FY24, Q2 FY24
Despite high spice inflation, Dabur remains committed to exiting the fiscal year with a run rate of INR 500 crore from its foods portfolio.
Mentioned in Q1 FY24, Q2 FY24
Management expects international business to continue high double-digit constant currency growth in second half, barring escalation of Middle East conflict.
Mentioned in Q3 FY24, Q4 FY24
Legal costs of INR 80-90 crore annually continue; case outcome remains uncertain despite management confidence.
Fast read
Guidance and risk preview
Management expects second-half revenue growth to return to mid-to-high single digits, subject to good winters and normal FMCG demand.
High food inflation (~9%) is shifting consumer spending from discretionary to essentials, potentially delaying urban recovery.
View Risks →