Dabur Q1 net profit increases by 8% to Rs 500 crore

Dabur Q1 profit: Dabur India, a leading consumer goods company, reported its first-quarter profit that met expectations, driven by robust rural demand for its personal care products. For the three months ending June 30, the company's consolidated net profit increased by 8 per cent to Rs 500 crore ($59.73 million), matching analysts' estimates according to LSEG data.

During the January-March period, Dabur saw a notable increase in fast-moving consumer goods (FMCG) sales, with rural demand outpacing urban growth for the first time in five quarters. This shift highlights a significant trend as the rural sector, which accounts for 45 per cent to 50 per cent of the company's total revenue, demonstrated stronger performance compared to urban markets.

The increased rural growth was a key driver in Dabur's overall sales improvement, reflecting the company's successful strategy in tapping into rural consumer needs and signalling a robust recovery in this important segment of their market.

Dabur India's consumer care segment, which accounts for 77 per cent of the company's revenue, experienced a 7 per cent increase during the quarter, leading to an overall revenue rise of 7 per cent. The company's financial performance was bolstered by stable commodity prices, with raw material costs rising by a modest 1 per cent. This stability in costs, combined with growth in the consumer care segment, significantly contributed to the company's positive revenue trajectory for the period.

Analysts observed that the early arrival of the monsoon season might enhance farm incomes and further stimulate rural consumption. In response to these developments, Dabur's shares increased by 1.5 per cent. This gain followed a notable 15 per cent rise in the company's stock during the June quarter, surpassing the 5.2 per cent increase in the Nifty fast-moving consumer goods index. The positive performance in the stock market underscores investor confidence in Dabur's prospects amid favourable agricultural conditions and robust rural demand.

In contrast, Hindustan Unilever saw increased earnings due to rising demand after price cuts, while Nestle India experienced its slowest growth in eight years, impacted by reduced consumer spending following price hikes.

The shares of Dabur India ended 1.05 per cent higher at Rs 642.40 apiece on the National Stock Exchange on Thursday, August 1, 2024.

(with Reuters inputs)