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Revenue growth mainly led by volume

DABUR released its pre-quarterly update for 3QFY24. Here are the key highlights:

Consumption

* As per the management, overall demand improved sequentially; however, rural growth still lagged urban growth.

* Early signs of a revival in consumption were visible as volumes improved.

* Growth was led by volume, as price growth remained subdued due to price increases in 3QFY23.

India business

* HPC is expected to grow in mid-single digits.

* The F&B business may grow in high-single digits.

* The Health Care business is likely to grow in low to mid-single digits due to a delay in the winter season.

* Badshah Masala witnessed strong momentum and is expected to post strong volume-led growth in high twenties.

International business

* On a constant currency basis, the international business is expected to grow in double digits, led by the MENA region.

Consolidated

* The management expects consolidated revenue to grow in mid- to high-single digits (3.4% YoY in 3QFY23; 7.3% YoY in 2QFY24, 4-year CAGR at ~8.6%).

* It expects higher gross margin expansion, supported by moderating inflation and cost-saving initiatives.

* A significant portion of the gross margin expansion will be directed toward increasing advertising and promotion (A&P) spending.

* The management expects operating profit to grow at a slightly higher rate than revenue and post an improvement in YoY operating margins.

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