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Dabur India Ltd reported a 5% drop in third-quarter profit on Thursday, with its revenue growth slumping to a ten-quarter low as customers in rural areas, reeling from the impact of high living costs, tightened spending.

The company, which makes products including shampoos and hair oil, said net income fell to 4.76 billion rupees (about $58 million) in the quarter ended Dec. 31, from 5.03 billion rupees a year earlier.

Its revenue from operations rose 3% to 30.43 billion rupees - marking its slowest growth since the April-June quarter of 2020, when revenue fell about 13% due to the pandemic lockdowns.

"The impact of inflationary pressures was more pronounced in the rural markets as marked downtrading and shift to more affordable and smaller packs led to rural growth lagging urban markets for the second quarter in a row for Dabur," Chief Executive Mohit Malhotra said in a statement.

Branded fast-moving consumer goods (FMCG) makers in India have struggled to pull in sales from rural areas as inflation-hit customers look for cheaper alternatives.

Dabur itself warned of these pressures last month, in its regular quarterly update ahead of earnings.

In fact, the drop off in rural spending slowed the entire FMCG sector's growth in the last three months of 2022, compared with the previous quarter, market intelligence firm NielsenIQ said on Thursday.

However, Dabur had said in its quarterly update last month that there were signs of recovery in rural demand, a view that its peers such as Hindustan Unilever and Godrej Consumer Products have echoed recently.

Dabur's shares, which declined 3% last year, were last down over 1% at 554.40 rupees on Thursday. ($1 = 82.1410 Indian rupees)