Dabur India, a firm that produces fast-moving consumer products, is looking to buy companies in the direct-to-consumer space as it strives to get into the market for cutting-edge brands.
The company’s consolidated net profit for the quarter increased by 3.52% to reach 456.61 crore on Thursday. As the company expanded in rural India, overall revenue increased 11% year over year to reach 3,130.47 crore in the first quarter. In its domestic business, Dabur reported an underlying volume rise of 3%.
“We’ve got money sitting in the balance sheet for acquisition purposes. We’re continuously scouting for targets in the D2C space and if we come across a company which is synergistic to us in the healthcare play or the personal care play or skincare…we will evaluate them and if it seems financially worthwhile, we will acquire the company,” Mohit Malhotra, chief executive officer, Dabur India, said during the company’s post-earnings call on Thursday.
“So rural for the category itself, or should I say, for the FMCG market has grown by 4%. We are growing ahead in rural at around 8% and urban growth for us is around 10%. So across all businesses, we have seen the recovery happen as rural recovers. Backed by rural, we are seeing a recovery in our general trade business,” Malhotra said.
Dabur will invest in brands that will “shore up margins”, he said. The company’s beverage lineup saw a decline in demand due to unseasonal rainfall in north and west India.
Dabur reported expansion in both urban and rural areas. After three quarters, the corporation claimed that rural growth “bounced back” to high single digits due to moderate inflation. Although rural growth still lags behind urban demand, Malhotra emphasised that the difference has largely closed.
Dabur’s gross margins for the quarter were 46.6%, up 74 basis points annually and 78 basis points quarterly. EBITDA margins were 19.3%, unchanged from the previous year but up 401bps from quarter to quarter. EBITDA was 604 crores, up 11% from the previous year.
The business has started a number of initiatives to boost efficiency, and the savings have been reinvested in its brands.
The company’s healthcare portfolio increased 12.85% over the previous year. This includes the company’s OTC segment, which includes brands like Lal Tail, Honitus, Dabur health drinks, and Shilajit, and which had a quarter-over-quarter rise of 24.3%.
While the hair care portfolio had growth of about 10% during the quarter, the oral care portfolio increased by 12.7%. The drinks portfolio decreased 2% year over year as a result of the unseasonal rains, despite the foods sector growing by 35%.
