Dabur India’s Q4 revenue dips

Chawanprash maker Dabur India revenue declined 12% in the fiscal fourth quarter to March 2020 due to the ongoing lockdown in the country. It expects further decline in sales over the next three months.
On Thursday, after market hours, the company reported a drop of about 24% in its consolidated net profit, at Rs 281.60 crore between Jan-Mar 2020 compared to the same quarter last year.
The weak performance owes to supply chain disruption towards the mid-march which led to lower stocking up of summer portfolio (Glucose D, Pudin Hara, Juices, Health supplements) ahead of peak season.
Dabur’s revenue from operations was down 12.3% to Rs 1,865.36 crore in Q4 compared to the same quarter last year.
The company’s factories were shut in the last week of March 2020 due to lockdown. Factory operations resumed selectively from the second week of April 2020 at operational capacity of 60-70%. The company had net cash reserves of Rs 3,800 crore as on 31 March 2020 to meet requirements in case of any emergency.
The outbreak of Covid-19 pandemic is causing significant disturbance and slowdown of economic activities globally. The nationwide lockdown ordered by the Government of India has resulted in a significant reduction in economic activities and also the business operations of the company in terms of sales and production.

Dabur in the May month had seen 80-90% of consumer demand coming back to the levels which existed prior to the breakout of COVID-19. However, it expects the impact of COVID-19 to continue in the coming quarter & forecasts a dip in its operating revenue to be in the range of Rs 400 to Rs 450 crore. It also expects net profit to take a hit of Rs 60 to Rs 80 crore. That’s about a 25% fall compared to the latest quarterly revenue.

Further, the company also launched five new products in the healthcare space along with immunity booster kit. DIL posted 400% surge in Chyawanprash demand & 80% growth in honey in the last few months inducing it to expand capacity of these products to meet the current demand. We believe health supplement would be driving the growth and could see structural demand improvement given increasing consumer awareness about health & immunity

The company launched several new products in the home & personal care (HPC) category, specifically hand sanitisers, air sanitisers, surface cleaners, veggie wash & disinfectant.

For Dabur, sanitisers & disinfectants could also become much bigger categories in the next two years given increasing preference for hygiene

The company is also concentrating on fruit drinks category (three new launches) given nectars & juices have been witnessing slower growth and opportunity is much larger in fruit drinks

Net net we expect flat sales growth in FY21 and strong bounce in revenue in FY22E considering its strong rural presence and increase in government welfare spends ahead.

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