Dabur India is facing a challenging landscape as it navigates the aftermath of a disappointing fourth quarter in FY25. According to a recent report from Axis Securities, the company’s revenue and profit projections for FY26 and beyond appear bleak, though the long-term outlook remains promising. With anticipated declines of 9% in revenue for FY26 and 12% for FY27, along with a 14% drop in profits, Dabur is under pressure to recalibrate its strategy.

Strategic Shifts for Future Growth

In light of the recent downturn, Dabur has unveiled a comprehensive strategy aimed at revitalizing its growth trajectory. The company plans to significantly increase investments in its core brands to enhance market penetration.

• Premiumization of Products: Dabur is set to modernize its health and beauty lines, introducing innovative offerings such as low-sugar beverages, new beauty serums, and health-focused gummies.
• Digital Transformation: Emphasizing the importance of digitization, Dabur aims to streamline its distribution channels and expand its popular Hajmola brand, along with its health juice segment.

Challenges Facing Dabur

Dabur’s core divisions—home care, personal care, and healthcare—are currently grappling with maintaining market share and revenue growth. Notably, the home and personal care segments account for nearly 48% of Dabur’s total sales. While overall segment growth showed a 3.3% increase year-on-year in Q4, significant subcategories reported declines.

• Declines in Key Subcategories: Oral care and hair care experienced drops of 5.2% and 4.6%, respectively, while the skin care category enjoyed an 8% growth. The home care segment barely increased, at 0.9% YoY.

Dabur’s healthcare division, contributing 30% to its total sales, managed a modest 4.7% growth in Q4 FY25, despite facing declines in health supplements and digestive products of 3.6% and 2.1%.

Mixed Results in Food and Beverage Categories

In the food and beverage segment, Dahbur saw promising growth in certain categories:

• Foods and Spices: Recorded a 14.2% and 6% growth year-on-year, respectively.
• Beverage Category: Unfortunately, this category faced a decline of 9.2%.

Root Causes of Declining Performance

The report from Axis Securities attributes Dabur’s struggles to weak urban demand coupled with rising food inflation. While international sales soared by 19.3% YoY in Q4, domestic sales fell by 3.4% during the same period.

• Urban vs. Rural Sales: Urban sales stagnated, while rural sales showed a robust growth of 14% in Q4.
• EBITDA Margins: The company’s EBITDA margins tightened by 150 basis points, dropping to 15.1% YoY. Input inflation for core areas, such as beverages and personal care, ranged from 4.5% to 5%, leading to insufficient price hikes, with an increase of only 3.5% in Q4 FY25.

Financial Overview for Q4 FY25

Dabur India reported a profit of Rs 329 crore in the fourth quarter of FY25, representing an 8.4% decrease from the previous year. Revenue remained stagnant at Rs 2830 crore, only slightly up from Rs 2814 crore in the corresponding quarter of FY24. This stagnation in revenue growth is a primary factor contributing to the decline in profitability.

As Dabur navigates these turbulent waters, the company’s commitment to its strategic roadmap will be crucial in regaining market confidence and ensuring sustainable growth in the future.