Dabur India on Thursday said its domestic business is expected to post high single-digit growth and a dip in inflation will lead to year-on-year gross margin expansion in the first quarter ended June 30.
In a BSE filing, the homegrown FMCG major said its consolidated business, including Badshah Masala, is expected to “register growth exceeding 10 per cent.” This is on the back of an improvement in demand in both urban and rural markets.
“One of the key contributing factors to this positive development has been the reduction in inflation. Sequential moderation in inflation has positively impacted consumer spending power and is resulting in gradual improvement in offtakes in the industry,” it added.
The company noted that the Healthcare and HPC businesses in India are projected to achieve double-digit growth backed by mid-single digit volume growth in Q1 FY24. “Within HPC, the Home Care category is expected to report value growth in high teens and Oral & Hair care categories growing in low double-digits. However, the F&B business, and in particular, the summer-centric beverages portfolio, had a muted quarter due to unseasonal rains and a moderate summer. Consequently, India business is expected to post growth in high single digit,” it added.
Stating that softening of inflation has had a positive impact on its business, Dabur India added that its international business is expected to report “ double-digit growth in constant currency.”
Gross margin expansion
It added that reduction in inflationary trends is also expected to help in “year-on-year gross margin expansion.” A major part of its gross margin expansion will be used to ramp up its advertising and promotion spends.
“Consequently, operating profit should grow in line with revenue growth. However, PAT growth will be lower than operating profit growth mainly due to brand amortisation expenditure on account of acquisition. For the full year, we expect improvement in gross margins to continue,” Dabur India said.