Dabur India Q2 Review – ‘Badshah’ Acquisition Further Widens Dabur’s Addressable Market: Nirmal Bang


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Dabur India Ltd.’s consolidated Ebitda declined by 3.2% YoY, as it had qualitatively highlighted in its pre-quarterly commentary, largely due to input cost inflation affecting operating margin performance.

While the fast moving consumer good market has been seeing a rural slowdown for the last five-six quarters, Dabur managed to buck the trend till Q1 FY23 because of the infrastructure it had put in place to expand its distribution reach.

But, in Q2 FY23, inflationary pressures affected rural markets for Dabur too and demand growth lagged urban markets for the first time in five quarters.

The ~6% YoY pricing growth in Q2 FY23 could only partially offset ~10% YoY inflation. This, along with the ~100 bps impact from mix and ~50 bps contraction attributable to rebalancing in consumer promotions led to ~350 bps compression in gross margin in Q2 FY23.

A sharp cut in advertising and promotion spends (down 210 bps YoY) contained the damage on operating margin. Ebitda margin stood at 20.1% (down 190 bps YoY).

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