Dabur India reported early signs of demand recovery during the third quarter, after consumers had deferred purchases ahead of the government's GST rate cuts that took effect in September. The FMCG major indicated that after trade stabilization, consumer sentiment improved in both urban and rural markets, with rural demand continuing to outperform urban demand during the quarter.

The company expects third-quarter consolidated revenue to grow in the mid-single digits, compared with 3.00% growth a year earlier. Indian consumer firms, including Dabur, have struggled with higher commodity costs and muted urban demand for several quarters, with the tax cuts disrupting sales in the second quarter as consumers deferred purchases until the lower prices kicked in.

GST Rate Revisions Drive Recovery

The Indian federal government announced cuts to its GST system in August, making everything from toothpaste to small cars cheaper from September 22. Dabur has earlier indicated that 60.00% of its portfolio, which includes key categories such as oral care products, juices, hair oils and shampoos, was taxed at rates of 12.00% and 18.00%, now face a levy of 5.00%.

Home & Personal Care Segment Drives Growth

The company's home and personal care segment is expected to deliver the strongest performance, with double-digit growth anticipated for the third quarter. This growth is being driven by robust performance in hair oils and oral care categories, positioning these segments as key revenue drivers.

Key brands expected to record healthy, volume-led growth include the Dabur Amla franchise, Dabur Almond, Dabur Anmol, Dabur Red Toothpaste and Meswak. The majority of the portfolio is continuing to outpace category growth and is likely to gain market share during the quarter.

Healthcare Business Shows Sequential Improvement

The healthcare segment is expected to see sequential improvement in growth, supported by strong performance across select categories. Dabur Honey is anticipated to grow nearly 10.00%, while Honitus and Health Juices are expected to deliver over 15.00% year-on-year growth.

While the Hajmola franchise and ethicals portfolio are likely to post mid-single-digit growth, primary sales of Dabur Chyawanprash are expected to remain muted, though secondary sales have stayed positive. The company expects Chyawanprash to gain momentum in January, aided by an extended winter season.

Foods & Beverages and Distribution Performance

In the foods and beverages segment, the culinary business is expected to deliver double-digit growth. However, the beverages portfolio, including nectars and drinks, is likely to see muted performance due to adverse seasonality, despite recording market share gains during the quarter.

Regarding distribution channels, organized trade remains strong while e-commerce, including quick commerce, is expected to grow in strong double digits, reflecting the company's successful digital transformation strategy.

International Business and Overall Outlook

The international division delivered healthy performance across key markets including MENA, Turkey, Bangladesh and the US Namaste business. Overall international revenue is expected to grow at near double digits in rupee terms, maintaining the strong momentum in global operations.

Dabur emphasized that favorable macroeconomic conditions and recent tax reforms should support sustained demand recovery in the coming quarters, helping improve the company's revenue trajectory after the temporary disruption caused by GST rate changes.

Dabur India Limited expects consolidated operating profit and net profit to grow faster than revenue in the third quarter of the current financial year, amid demand recovery aided by GST rate revisions. The FMCG major has announced early signs of demand recovery during the October-December quarter, marking a positive shift in market conditions following government tax reforms.

Rural Markets Drive Recovery Momentum

The company highlighted that rural demand continues to outperform urban demand during the quarter, reflecting improved consumer sentiment in smaller markets. This trend underscores the effectiveness of recent policy measures in stimulating consumption across India's diverse market segments.

GST Rate Revisions Drive Market Recovery

The government restructured the GST rate framework in late September, bringing most consumer goods into the 5.00% bracket, significantly benefiting FMCG companies. Following this change, distributors and retailers initially focused on liquidating existing higher-priced inventory in the channel during October. Post trade stabilisation, consumer sentiment improved across both urban and rural markets.

Home & Personal Care Segment Shows Strong Momentum

The company's domestic Home & Personal care business is expected to deliver robust double-digit growth, primarily driven by strong performance in Hair Oils and Oral care categories. The majority of the company's portfolio continued to outpace category growth and is expected to register market share gains during the quarter.

Healthcare and F&B Segments Show Mixed Performance

The Healthcare business is expected to grow in low single digits, showing sequential improvement in its growth trajectory. Within the Food & Beverages segment, the Culinary business is projected to deliver double-digit growth, while beverages face seasonal challenges.

Despite adverse seasonality affecting nectars and drinks performance, the beverage portfolio gained market share during the quarter, reflecting strong consumer confidence in the 'Real' brand.

Favourable Macro Conditions Support Sustained Recovery

The company expects favourable macro conditions and tax reforms to support sustained recovery in demand going forward. This positive outlook is reinforced by the international business expected to post near double-digit growth in rupee terms, demonstrating robust performance across key geographies.

The company's board will consider and approve the third quarter financial results at a meeting scheduled for January 29.