DABUR - Dabur India Ltd. Share Price

Dabur India's management provided an optimistic outlook during the earnings call for Q4 FY25, projecting significant growth potential in the coming years. The consolidated revenue for FY25 stood at INR 12,563 crores with a PAT of INR 1,768 crores, reflecting a growth of 3.6% in constant currency terms. Looking ahead, the management aims for a sustainable double-digit CAGR in both top-line and bottom-line by FY28.

Key forward-looking points include:

1. Market Strategy: Investment in core brands, including Dabur Red, Real, Chyawanprash, Honey, Hajmola, and others, which contribute around 70% of the portfolio.
2. Premiumization: Introduction of premium products across categories, such as active health juices and benefit-driven beauty products. This strategy includes efforts to modernize the consumer experience with new formats like gummies and powders in health care.
3. Portfolio Rationalization: The management plans to exit underperforming categories such as tea, baby diapers, and sanitizing products to refocus resources on more lucrative areas.
4. Expansion of Emerging Channels: A double-down on e-commerce, quick commerce, and modern trade to drive growth, complemented by reducing costs through improved distribution efficiency.
5. Aggressive M&A: Pursuit of mergers and acquisitions focused on health care and wellness foods to bolster the portfolio.
6. Growth Forecast: Management anticipates high single-digit to near double-digit value growth in FY26, supported by easing food inflation and favorable macroeconomic conditions, including higher disposable incomes due to recent tax cuts.
7. Category Performance: The international business showed a robust 19% growth and there are expectations of sequential improvements in the domestic segments once urban consumption starts recovering.

Overall, the emphasis is on leveraging core strengths, investing in innovation, and adapting to market changes to drive growth going forward.

1. Question: "My first question is on McKinsey. Can you share what are the initial suggestions and focus areas?"
Answer: We've engaged McKinsey for a profound examination of market trends. They emphasized portfolio rationalization, indicating we will exit non-performers like tea and baby diapers. We need to invest more in premiumization and contemporization strategies, particularly in categories like hair care and health supplements. This effort to refine our portfolio aligns with our growth ambitions and strengthens our core brands.

2. Question: "What kind of growth can we expect for the India business in FY '26?"
Answer: We anticipate a high single-digit to near double-digit growth in value terms for FY '26, given the favorable macroeconomic environment, reduced food inflation, and tax cuts. While we acknowledge a strong base from last year, we expect a gradual improvement starting from Q1. Urban sectors may grow more slowly initially, but we foresee positive trends as discretionary spending increases.

3. Question: "What is the growth expectation for the beverage portfolio in FY '26?"
Answer: Our growth expectation for the beverage portfolio is low to mid-single digits due to competitive pressures. However, we are focused on initiatives, including introducing new price points and expanding rural distribution. We're optimistic as we correct the trajectory of our active range, which is performing well.

4. Question: "What factors are causing the weakness in oral care and what corrective actions are being taken?"
Answer: The oral care segment saw a decline primarily due to a high base effect, not to ongoing performance issues. Despite a sequential decrease, market shares are growing. Going forward, we are amplifying promotional efforts and addressing product cycles to boost performance in the oral care sector, targeting expanded engagement with our key brands.

5. Question: "What are the product categories you plan to exit and why?"
Answer: We plan to exit tea, baby diapers, and the Vita category due to their margin dilution and limited growth potential. These categories contribute less than 1% to our overall revenue. This decision allows us to realign focus on our core, high-potential segments and better allocate resources for maximum impact.