Dabur hints at D2C acquisitions with eye on new-age brands
2 min read 04 Aug 2023, 11:33 AM ISTDabur reported a 3.52% jump in consolidated net profit for the quarter at ₹456.61 crore
PremiumNew Delhi: Fast moving consumer goods company Dabur India is eyeing acquisitions in the direct-to-consumer segment as it tries to make inroads into the market for new-age brands.
“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.
Dabur will invest in brands that will “shore up margins", he said.
On Thursday, the company reported a 3.52% jump in consolidated net profit for the quarter at ₹456.61 crore. Consolidated revenue grew 11% year-on-year to touch ₹3,130.47 crore in the first quarter as business grew in rural India. Dabur reported an underlying volume growth of 3% in the domestic business.
Unseasonal rains in north and west India dented demand for the company’s beverages portfolio.
Dabur reported growth across rural and urban markets. Moderation in inflation helped rural growth “bounce back" to high single digits after three quarters, the company said. While rural growth continues to lag urban demand, the gap has reduced significantly, Malhotra added.
“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’s gross margins for the quarter stood at 46.6%, up 74bps year-on-year and 78bps quarter-on-quarter. EBITDA margins stood at 19.3%, flat year-on-year, but expanded 401bps quarter-on-quarter. EBITDA stood at ₹604 crores—up 11% year-on-year.
The company has initiated several measures to drive greater efficiency; the gains were ploughed back in the form of higher investments in its brands.
The company’s health care portfolio grew 12.85% year-on-year. Within this, the company’s OTC business with brands such as Lal Tail, Honitus, Dabur health juices and Shilajit reported a 24.3% growth during the quarter. The oral care portfolio grew by 12.7%, while the hair care portfolio posted a near 10% growth during the quarter. While the foods business grew by 35%, the beverages portfolio was down 2% year-on-year impacted by the unseasonal rains.
