The FMCG company Dabur India Ltd. revealed on Wednesday that its consolidated net profit for the Q2 ended September 30 fell by 2.85% YoY to $490.86 crore from Q2FY22’s reported amount of $505.31 crore.
However, comparing to Q2FY22, when it reported 2,817.58 crores in revenue from operations, Q2FY23 saw a growth of 6% to 2,986.49 crores. Constant currency growth in revenue for the second quarter was 8.5%. The three-year CAGR for the quarter’s consolidated revenue was 10.5%.
In a regulatory filing, the business asserted that it had continued to show flexibility and resiliency to sustain consistent organic growth in a challenging setting and was distinguished by extraordinary inflation and its subsequent impact on demand.
“While the challenging economic environment continued to be a concern and impacted the purchasing power, we are seeing green shoots of recovery with the onset of the festive season.
The impact of inflationary pressures was more pronounced in the Rural markets with demand growth in hinterland lagging Urban markets for the first time in five quarters,” said Dabur India’s Chief Executive Officer, Mr. Mohit Malhotra.
He further added that they are hopeful of the rural demand reporting a smart and better recovery in the upcoming quarters, and they are investing ahead of the curve for riding this demand recovery by expanding their rural footprint by adding almost 9,000 villages in Q2 of 2022-23.
Dabur accomplished rapid progress
Dabur is increasing its sustainability, digitalization, and capital spending expenditures because it is committed to generating shared value. On the ESG front, Dabur has accomplished rapid progress and has high goals for the future.
For example, in 2021–2022, Dabur became India’s first consumer products company to be utterly waste-neutral concerning plastic. Dabur’s brands have expanded their share in the market ahead of the competition in 95% of its product line.
For example, in the area of juices and nectars, Dabur had a 410 bps rise in market share, while our market share in the category of digestives increased by 270 bps.
While our market share for shampoo increased by 40 basis points, it increased by 120 basis points for Chyawanprash. On the other hand, the market share held by Dabur in hair oils increased by 20 basis points.
Dabur’s strategy is still based on innovation, and new releases make up roughly 4% of total sales.
Dabur’s Foods & Beverages division experienced a substantial 30% growth. The business of beverage ended the quarter with a 30% jump, while the Foods division had a boost of 21%. Due to the outstanding performance of our renowned Dabur Red Paste, the Home Care sector grew by nearly 21%, while the Toothpaste sector grew by over 11% during the quarter.
During the quarter, the Shampoo & Post-Wash business grew by 9%. Additionally, the OTC Ayurvedic segment of Dabur increased by more than 9% from one quarter to the next. Consistent currency growth of 12.3% was recorded by Dabur’s International Business, which was primarily fueled by notable gains in Egypt (23%), Turkey (86%), and Nepal (25%).
51% shares of Badshah Masala Pvt Ltd will be acquired
To acquire 51% of the total outstanding shares of Badshah Masala Private Limited, Dabur India Limited has announced the signing of binding agreements. As a result of this purchase, Dabur is on track to achieve its strategic goal of expanding into adjacent categories and growing its food business to 500 crores in three years.
Additionally, it marks Dabur’s entry into the lucrative Indian market known for branded spices and seasonings, valued at over 25,000 crores.
Dabur will pay 587.52 crores, less proportionate debt as of the closing date, to acquire 51% ownership in the Badshah company, valued at 1,152 crores. This translates to an EBIDTA multiple of around 19.6x and a revenue multiple of about 4.5x, according to the expected financials for FY2022-23.
Badshah Masala Private Limited Managing Director Mr. Hemant Jhaveri commented, “We are delighted to enter into a strategic partnership with Dabur.” He further explained that Dabur had gained Trust and Heritage, and joining hands with them would help the firm drive Badshah’s future growth potential.
In addition, the collaboration will enable them to accelerate growth simply by adding products to Dabur’s board.