Dabur Q2 Results: Domestic volume growth at 3%, one-time legal costs impact profit

Domestic FMCG major Dabur India Ltd. reported volume growth of 3%, which fell short of a CNBC-TV18 poll projection that ranged between 4% and 5%.

The company, in its quarterly business update last month, had projected a recovery of consumption in both urban and rural markets in India due to improving macro indicators, increase in government expenditure and positive consumer sentiment.

For the quarter, Dabur reported a net profit of ₹515 crore, which was in-line with the ₹505 crore estimate. On a year-on-year basis, the company's bottomline grew by 5%.

Dabur's CEO Mohit Malhotra told CNBC-TV18 in a post earnings interaction that a one-off legal costs affected the company's profitability during the quarter. The lawsuits pertain to one of the products that are sold by the company's step-down subsidiary.

For the current quarter, Dabur incurred legal costs of ₹36 crore and Malhotra believes that these costs are likely to be lower in the coming quarters.

Revenue for the July-September period also met expectations at ₹3,204 crore, which is an increase of 7.3% from the year-ago quarter.

Operating profit or EBITDA grew by 10% from last year to ₹661 crore and was marginally higher than the ₹645 crore projection, while margin expanded by 50 basis points to 20.6%. The poll expected the margins to remain flat at 20.1%. CEO Malhotra expects the margin to remain around the 19% mark going forward.

With a 3% price growth, Dabur is targeting mid-single-digit volume growth and high-single to low-double-digit revenue growth in the second half of the year, Malhotra said.

"While the FMCG consumption is showing year-on-year improvement, however the recovery has been gradual. This quarter witnessed a mild summer and a slightly deficient monsoon. Festive season is later than normal this year due to which offtake related to festivals is delayed and will carry forward to next quarter," the company had highlighted in its business update.

Shares of Dabur ended at the day's high with gains of 3.06% higher at ₹532.90.