Dabur stock lacks triggers amid weak financial show

Dabur India Ltd is finding it tougher to boost sales amid gloomy demand conditions for the entire FMCG sector. Weak execution and unfavourable seasonality are some factors that led to a miserable March quarter (Q4FY25).

Consolidated revenue was flattish year-on-year at ₹2,830 crore, entirely driven by pricing, with domestic sales volume dropping about 5%. Revenue from domestic home and personal care, healthcare, and beverages portfolios declined 3.3%, 4.7%, and 9.2%, respectively. Food grew by 14%.

Dabur’s international business, contributing about 29% of total Q4 sales, clocked 19% constant currency growth. But that did not move the needle much. Overall profit margins slipped to multi-quarter lows. Gross margin contracted 192 basis points (bps) year-on-year to 46.7% as raw material costs rose steeply. A decline in staff costs and advertisement & publicity expenses helped curb the Ebitda margin drop to 150 bps to 15%. Thus, Q4 Ebitda declined 8.5% over the previous year.

With most of its categories reporting a decline in revenue, the upcoming season will be critical to track, said a report by Motilal Oswal Financial Services, adding, “Near-term growth worries persist amid weak summer season demand and slow power brands’ performance."

Also Read: Q4 earnings watch: Whispers of rural recovery as revenues buck broader trend

Dabur increased prices by 3.5% last quarter to cope with rising costs. The price hike benefits should start to kick in Q1FY26, thus leading to sequential margin improvement. The management expects high single-digit to near double-digit revenue growth in FY26 on a low base of 1.3% growth in FY25.

Based on recommendations from McKinsey, Dabur announced a ‘refreshed vision’ strategy to accelerate profitable growth. The company has identified seven initiatives, such as investment in core brands, premiumization and contemporization across categories, and bold bets across health and wellness spaces.

“While refreshed vision is a step in the right direction, we see challenges to core categories – especially rising competitive intensity in oral care, hair oils & beverages; and healthcare category relevance still remaining weak. As a result, performance for Dabur has been volatile versus other Staples peers," said JM Financial Institutional Securities Ltd.

Dabur’s shares are down about 16% in the past year, underperforming the sectoral Nifty FMCG index. The stock trades at 41 times FY26 estimated earnings, as per Bloomberg data. Near-term triggers appear limited as the pace of growth is unlikely to see a dramatic rise immediately, although the Street may reward sustainable signs of improvement in revenue trajectory.

Also Read: FMCG slowdown prompts Dabur to shorten strategy review timeline