Dabur shares crack nearly 5% on disappointing Q4 revenue growth update

The inorganic revenue growth which was to the extent of around 2.3% in the December quarter on account of the Badshah acquisition is now factored into the base.

Meanwhile, rural growth picked up fuelled by price rollbacks in staples which led to the gap between rural and urban narrowing. With a positive outlook for the rabi crop harvest and monsoon forecast to be normal, Dabur expects consumption to pick up in the coming months.

In the India business, the HPC segment is expected to grow in high-single digits during Q4, while healthcare and F&B segments are expected to register low single-digit growth. F&B had a high base last year and the Healthcare portfolio was impacted due to the delayed winter.

Badshah Masala continued to perform well in the fourth quarter and is expected to post strong volume-led growth in the high teens.

"We continued to gain market share across our categories driven by strong execution in the market. International Business is expected to register double-digit growth in constant currency terms, led by good momentum in the MENA region, Egypt & Turkey. However, due to the impact of currency depreciation in Turkey and Egypt the translated revenue in INR terms will show growth in mid single digits," Dabur said.

In line with the strategy to invest in its brands, the company sees higher advertising spending. The operating profit is expected to grow slightly ahead of the revenue and post an improvement in year-on-year operating margins.

Gross margins are also likely to expand due to deflation in input costs and other cost-saving initiatives. Shares of Dabur India have seen a muted run so far this year, falling nearly 10% year-to-date (YTD).