Categories Concall Highlights, Consumer, Earnings

Dabur India Limited Q2 FY23 Earnings Conference Call Insights

Key highlights from Dabur India Limited (DABUR) Q2 FY23 Earnings Concall

Management Update:

  • [00:02:31] DABUR said its acquisition of Badshah Masala is in line with the company’s strategic intent to expand its foods business to INR500 crores in years’ time.

Q&A Highlights:

  • [00:06:48] Abneesh Roy from Nuvama asked about Skin & Salon having just 1.1% growth on a YonY basis and if there’s any shift in consumer behavior. Mohit Malhotra CEO replied that slow growth was as DABUR was lapping over a very high basis and it contains sanitizer piece.
  • [00:09:05] Abneesh Roy with Nuvama enquired about ecommerce portfolio and which ones are successful. Mohit Malhotra CEO answered that ecommerce is doing very well for DABUR with about 50% growth in 2Q23. The products doing good in ecommerce is DABUR’s baby care range, apple cider vinegar, and most of the juices and drinks products have done well along with edible oils.
  • [00:14:48]  Abneesh Roy from Nuvama asked about Badshah Masala and what’s the expectation of scale-up over a 3-4 year time frame, given that in 60 years it’s around INR200 crores. Mohit Malhotra CEO replied that it’s a very old brand. Badshah Masala is around 4-5% market share in their core markets. There is lot of room to get converted from unorganized to organized, so the scale-up will happen in due course of time.
  • [00:20:16] Shirish Pardeshi of Centrum Broking enquired about the healthcare business declining post COVID, and it’s outlook for rest of the year. Mohit Malhotra CEO answered that pre-COVID the business was about 30% contribution to the overall business. Currently, post-COVID, it’s balancing out and in season time it’s back to 30% levels.
  • [00:26:13] Shirish Pardeshi with Centrum Broking asked about channel mix in terms of modern trade. Mohit Malhotra CEO said that majority of the business is happening from GT of about 95%, ecommerce is almost nil and for Dabur ecommerce is around 9%, which gives opportunity to make ecommerce at least 5% in a couple of years. So there will be a lot of leverage that will happen with DABUR’s infrastructure for Badshah.
  • [00:26:28] Shirish Pardeshi with Centrum Broking also asked about how much of Badshah’s Gujarat and Maharashtra market contributes to the overall sales. Mohit Malhotra CEO replied that around 80-90% of the business comes from Gujarat, Maharashtra and some places adjacent to Maharashtra, Andhra Pradesh and Telangana.
  • [00:32:41] Arnab Mitra from Goldman Sachs asked about margins overall for the Dabur consolidated business, how it will be in 2H23 given the mix.  Mohit Malhotra CEO replied that DABUR expects inflation to abate to 6% levels from 10%. With this, DABUR expects its margins to be better sequentially but anticipates some margin erosion in 3Q23 and 4Q23.
  • [00:34:05] Harit Kapoor from Investec enquired how much of the 350 bps decline in gross margin in 1H23 in India could be attributed to the inflation impact and mix. Ankush Jain CFO said that out of350 bps, 200 bps would be due to inflation and rest 100 bps due mix and 50 odd bps would be due to some rebalancing in consumer promotion.
  • [00:37:47] Shrenik Bachhawat of LIC Mutual asked about state wise revenue-share for Badshah as of now. Ankush Jain CFO answered that Maharashtra is around 35%, Gujarat 40% and Telangana around 10%.
  • [00:38:39] Shrenik Bachhawat of LIC Mutual also asked about the outlook on ad spends for 2H23. Mohit Malhotra CEO clarified that DABUR cut back on ad spends by around 20% plus in 2Q23 due to inflationary pressures. But overall advertising and promotion spends in 2Q23 has gone up by about 7%. DABUR added that overall spends are in the range of around 15% and will remain that much.
  • [00:40:01] Shrenik Bachhawat of LIC Mutual enquired about the asset turn expected on the new Indore plant and the revenue expectations in FY25. Ankush Jain CFO answered that the company is expecting around three times asset turn of INR900 odd crores at the peak of around FY27.
  • [00:41:47] Avi Mehta with Macquarie asked about rural recovery, if the company is optimistic on it.  Mohit Malhotra CEO replied that DABUR is not really optimistic. The company added that it has seen the credit pressure, liquidity pressure coming in rural business. However, the festive season has brought some optimistic hope in terms of pipeline of healthcare products.
  • [01:04:34] Sheela Rathi from Morgan Stanley enquired about 95% market share gains across categories and if there is any competitive intensity from large players or D2C sites. Mohit Malhotra CEO answered that hair oils is facing huge competitive intensity from a large player. In skincare, DABUR is facing some pressure from local, small players. But in D2C, there is no pressure.

Most Popular

Cochin Shipyard Ltd (COCHINSHIP) Q4 FY22 Earnings Concall Transcript

Cochin Shipyard Limited (NSE:COCHINSHIP) Q4 FY22 Earnings Concall dated May. 26, 2022 Corporate Participants: Madhu S Nair -- Chairman & Managing Director Jose V J -- Director Finance Analysts: Vastupal Shah

All you need to know about Antony Waste Handling Cell in one article

Can you guess the name of the company that was listed during the IPO frenzy in 2020 and is the second largest player in the Indian municipal waste management industry?

Demystifying the Leading Non-Ferrous Recycling Company of India

“Hey, how is the market doing today?” “Oh!, its falling tremendously since morning” I am sure news like these might be a common topic of discussion for you nowadays. Interestingly,