Dabur India

Dabur India reported a challenging Q4 FY25, with consolidated revenue growing 0.6% in INR terms and 2.1% in constant currency. This was primarily due to a decline of approximately 3.4% in the India business. In contrast, the international business demonstrated strong performance, growing 19.3% in constant currency. For the full fiscal year 2025, the company achieved a consolidated revenue of INR 12,563 crores and a Profit After Tax (PAT) of INR 1,768 crores, reflecting a 3.6% constant currency growth for the year, impacted by a Q2 inventory correction.

The company has unveiled a refreshed Vision strategy, aiming to achieve a sustainable double-digit CAGR in both top line and bottom line by financial year 2028. This strategy is built on seven key pillars, including continued investment in core brands like Dabur Red, Real, and Chyawanprash. A significant focus will be on premiumization and contemporization across the portfolio, with specific examples in hair care (serums, conditioners), oral care (benefit-led toothpaste), and healthcare (gummies, effervescents). Dabur also plans to rationalize underperforming products such as tea, baby diapers, and Vita to free up capital for bigger bets.

Within the HPC segment, Skincare recorded an 8% growth driven by the Gulabari franchise, while Home Care grew in low single digits, with Odonil gaining 67 basis points market share. Hair Oils grew ahead of the category, securing 196 basis points market share, and Coconut Hair Oil saw an 11% growth. The Healthcare portfolio experienced muted performance, as Honey and Chyawanprash were affected by delayed winters, though both gained market shares of 162 bps and 75 bps respectively. Glucose was a strong performer, growing 10% with 112 basis points market share gains.

The Foods business continued its growth momentum, with the Culinary segment growing 14% led by the Hommade brand. Badshah grew 6% in Q4 and 12% for the full FY25. The beverage portfolio faced challenges due to a slowdown in urban consumption, where 70% of its sales are concentrated. However, premium segments like Real Activ and coconut water recorded a robust 11% growth, contributing to a 261 basis points market share gain in the Juices & Nectars (J&N) category.

Dabur experienced a standalone gross margin contraction of 240 basis points in Q4 FY25. This was primarily attributed to high inflation, which was around 4.5-5% in the quarter, and competitive intensity that limited the company's ability to pass on full price increases. While price increases of approximately 3.5% were implemented across categories (4.5-5% in Health Care, 1.5% in Personal Care, 1.6% in Beverages), the full impact was not realized. Management expects these price increases to flow through in Q1 FY26, which should aid in margin recovery.

Rural tertiary sales showed strong growth of 13-14% in Q4 FY25, according to Nielsen data, while urban markets remained flat. The company completed an inventory correction in the previous year, reducing distributor inventory from 30 to 21 days, which impacted primary sales but ensured healthy secondary sales. The refreshed GTM strategy includes stockist consolidation in urban India, expanding distribution in Class 3 and 4 towns and rural areas, and focusing on affordable INR10/20 bundle packs to leverage its rural infrastructure.

Dabur is currently recycling over 100% of the plastic it consumes. However, new government regulations requiring specific percentages of recycled material in packaging (10% for flexible, 30% for hard from April 1, 2025) pose challenges. The company, along with the industry, has represented to the government, citing limited capacity for recycled plastic, its higher cost compared to virgin plastic, and reluctance to use it in food, Ayurvedic, and pharmaceutical products due to health and safety concerns. The company seeks more time for the industry to develop capacity and reduce costs.