DABUR INDIA REGISTERED MUTED PERFORMANCE IN Q4FY25 DUE TO SUBDUED DEMAND ENVIRONMENT IN THE DOMESTIC MARKET

News: Dabur India registered muted performance in Q4FY25 due to subdued demand environment in the domestic market and some of the categories faced high competitive pressure. Its consolidated revenues remained flat to Rs2850crore in-line with average street expectation of Rs2,843crore. Domestic India business declined by 5% affected by 7%yoy decline in foods & beverages (F&B) business (beverages decreased by 9% due to high competition and urban slowdown), 3% decline in the HPC segments (oral care declined by 5% due to high base) and Healthcare segment declined by 4.7% during the quarter. Higher input prices led to 192bps decline in the gross margins to 46.6%. lower operating leverage led to 150bps decline in the EBIDTA margins to 15% slightly lower than average street expectation of 15.5%. Operating profit declined 8.6% YoY to Rs.426.9crore. Reported PAT witnessed 8.5% decline to Rs.320crore (slightly below street expectation of Rs330crore).

View: Dabur's muted performance in Q4FY25 was in-line with the narrative given in the pre-quarter update. Inventory correction, competitive pressures and demand slowdown continues to put pressure on Dabur’s performance for past few quarters. Management is aiming for double digit revenue and PAT growth CAGR over by FY28. This will be driven sustain investments in core portfolio, distribution expansion and increased focus on Premiumising the portfolio. However these actions are likely to deliver improved growth in FY27/FY28. The company seeks to exit in low margin businesses such as Tea, Adult and Baby Diapers and sanitizing category (cumulative contributing less than 1% of revenues) to focus on the improvement in the growth of core categories. We expect the competitive pressure in some of the categories and gradual recovery in urban demand will continue to put pressure on the Dabur's performance in the near term (management expects high single growth in FY26). Thus, in the FMCG space we continue to prefer stock such as Tata Consume products and Marico who has strong product portfolio, better distribution and channel mix which will help them deliver relatively better performance compared large peers in the near term.

Impact: Neutral