Dabur: Consolidated revenue in Q2 likely to grow in mid-single digit; input cost pressure, inflation impacting gross margins

Home-grown FMCG major Dabur India on Thursday said its domestic business had a "steady performance" and is expected to report "revenue growth in mid-single digit" for the second quarter ended September.

Despite the macro-economic challenges, Dabur said it continued to "grow ahead of category growths and gain market share" in most of the segments in the September quarter, both in domestic and overseas markets.

"Overall, the consolidated revenue is expected to grow at mid-single digit," the company said in its quarterly update.

Dabur's Food & Beverages vertical continued to lead with double-digit growth on a high base of 43 per cent rise in the second quarter of FY22 in the domestic market.

"Home and Personal Care portfolio is expected to record mid-single digit growth on a high base of 16.7 per cent growth in Q2FY22.

"Healthcare vertical is expected to report a near double-digit growth in terms of 3-year CAGR but will see a muted performance during the quarter on the back of high Covid base," it said.

However, some markets like Turkey and Egypt continued to see currency devaluation during the quarter impacting the translated growth.

During the quarter, inflation was at peak levels which impacted gross margins.

"The input cost pressure led to a near-term impact on operating margin which is expected to be lower by around 150-200 bps as compared to Q2 FY22 but will see sequential improvement.

"With commodity prices easing, inflation is expected to ease in H2 FY22 leading to y-o-y (year-on-year) improvement in operating margins," it said.

The geopolitical situation continued to impact the business with unprecedented inflation during the quarter.

Going forward, Dabur expects that moderating inflation and the festive season should support consumption growth in the second half of this fiscal.

According to the company, this quarterly updates provide an overall summary of the performance and demand trends witnessed during the second quarter of FY23.