Dabur India posts robust Q2 net profit despite challenging market; Announces interim dividend

Dabur India Limited, one of India’s leading names in Ayurveda and FMCG, has reported a consolidated net profit of Rs 425 crore for the second quarter of 2024-25, while revenue stood at Rs 3,029 crore. Despite a challenging macroeconomic landscape, including high food inflation and constrained urban demand, Dabur has managed to navigate these difficulties effectively, according to Chief Executive Officer Mohit Malhotra.

The Board of Directors, in a meeting held in New Delhi on October 30th, 2024, announced these financial results for the quarter ending September 30th, 2024. In addition to the positive financial outcomes, Dabur also declared an interim dividend of Rs 2.75 per share, amounting to a total payout of Rs 487.39 crore, which Chairman Mohit Burman highlighted as part of the company’s commitment to rewarding its shareholders.

Navigating a Challenging Market Environment

Malhotra indicated that recent trends in consumer behavior have favored newer retail channels such as quick commerce, which is growing at high double-digit rates and putting pressure on traditional General Trade. In response, Dabur took the strategic step to rationalize inventory within General Trade channels, a move that caused a temporary dip in sales but ultimately strengthened the company’s long-term health and positioned it for future growth.

“While this adjustment led to a dip in immediate sales figures, the fundamentals of Dabur’s business remain robust, with secondary sales growing over 2% in the second quarter and a five-year revenue CAGR for the India business exceeding 8%,” said Malhotra.

Resilience and Expansion Across Markets

Dabur has seen growth across almost 95% of its brand portfolio, with rural demand growth surpassing urban demand by 130 basis points during the quarter. The company has been focusing heavily on expanding its rural footprint and product offerings. Dabur’s initiatives in rural India include launching affordable product bundles tailored specifically for rural consumers, along with an active push for consumer engagements in these regions.

The international business has also performed well, reporting strong constant currency growth of 13% in the second quarter. Notably, Dabur’s Egypt business grew by an impressive 73%, while the MENA region and Sub-Saharan Africa reported 10% and 26% growth, respectively. The Badshah business also grew by 15% during the same period, demonstrating the company’s broad-based growth initiatives.

Commitment to Sustainability and Long-term Goals

Dabur’s sustainability efforts have not gone unnoticed, with the company achieving a Corporate Sustainability Assessment (CSA) score of 81 in 2024, an improvement from the previous year’s score of 72. “Our focus on sustainable and responsible growth is a core aspect of our strategy,” Malhotra noted, underlining the company’s dedication to minimizing environmental impacts while scaling operations.

Dividend for the Investors

Dabur has continued its tradition of rewarding its shareholders. The Board declared an interim dividend of 275% (i.e., Rs 2.75 per share) for the year 2024-25, totaling Rs 487.39 crore. Chairman Mohit Burman emphasized that this declaration aligns with the company’s ongoing payout policy, ensuring consistent returns to shareholders.

Expert Opinion: Focus on Fundamentals Amid Market Challenges

Industry analysts have largely praised Dabur’s proactive strategies in addressing the shifting consumer landscape. Experts have pointed out that by focusing on secondary sales growth and reducing inventory pressures in traditional trade, Dabur is positioning itself as a resilient player that is well-prepared for future headwinds. They also emphasize that the company’s expansion in rural markets and investments in emerging channels like quick commerce are aligned with broader market shifts.

Analysts suggest that Dabur’s ability to maintain positive revenue growth and profit figures during a period of high inflation reflects strong brand loyalty and effective market engagement strategies. The steady increase in its sustainability score is also seen as a move that enhances Dabur’s market reputation and long-term profitability.