Shares of Dabur India suffered a steep decline on January 6 after the company said demand trends for the industry remained weak during the third quarter with rural markets staying under pressure.
In its business update, the company highlighted that the pressure was further accentuated by the late onset of winter in North India but early signs of moderate recovery were visible towards the latter part of the quarter coupled with some cool-off in inflation.
“On account of the challenging macro-economic environment and muted category growths in the quarter, Dabur's India business is expected to report low to mid-single digit revenue growth,” the company said. “Healthcare portfolio returned to the positive growth trajectory, still navigating high bases of the pandemic. Food and beverages business continues to trend at robust levels. During the quarter, F&B's growth will see some moderation on account of early onset of the festive season.”
As of 1.43pm, shares of Dabur traded down nearly 4 percent at Rs 552.80 on the BSE. The stock has not performed well in the last year. During the period it is down 5 percent, data shows.
The main reason behind lacklustre performance has been lack of revenue growth especially in the rural market. The phenomenon has plagued almost all major FMCG companies.
However, things may be changing for good.
“The improving macroeconomic environment, positive steps being taken by the government and the expected stimulus of the upcoming Union Budget should help speed up the recovery of the industry,” said Dabur.
“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 said its international business is expected 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 INR would be impacted.
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