Dabur India Limited Q3 FY25 Earnings Call Summary

Summary

Dabur India Limited - Q3 FY 2025-26 Earnings Call Summary Thursday, January 29, 2026 5:00 PM

Event Participants

Executives 4 Ankush Jain (CFO), Gagan Ahluwalia (VP- Corporate Affairs), Isha Lamba (Head- IR & M&A), Mohit Malhotra (CEO)

Analysts 5 Abneesh Roy (Nuvama), Ajay Thakur (Anand Rathi), Harit Kapoor (Investec), Mihir Shah (Nomura), Nihal Mahesh Jham (HSBC), Percy Panthaki (IIFL), Prakash Kapadia (Kapadia Financial Services)

Financials & KPIs

Geographic & Segment Commentary

• Domestic FMCG: Recorded 6% YoY growth with 3% volume growth. Recovery was sequential, with December performing significantly better than a transiently weak October/November due to GST transition and old stock liquidation.
• Healthcare: Supplements grew in low single digits; Honey saw 10% volume growth, while Chyawanprash was flat in primary sales due to high trade inventory, though tertiary offtakes grew 11%. Health juices grew 17.9%.
• Home & Personal Care (HPC): Hair Care grew 19.1% (Hair Oils) and 6.2% (Shampoos), reaching an all-time high volume market share of 20%. Oral care grew 10%, with Herbal variants outperforming non-herbal segments by 530 bps.
• Food & Beverages: Culinary grew 14%, while Juices and Nectars were muted due to an unfavorable season. However, premium “Real Activ” 100% juices and coconut water grew 38% and 52%, respectively.
• International: Strong growth in Sub-Saharan Africa (+30%) and UK/EU (+30%), while Namaste US grew 19.3%. Growth was offset slightly by geopolitical disturbances affecting specific export markets.

Company-Specific & Strategic Commentary

• GST Transition & Pricing: Management deferred price increases in Q3 to avoid anti-profiteering issues during the GST rate cut transition. A 2% price hike is planned for Q4 to capture rollover benefits into FY27 (Mohit Malhotra).
• Portfolio Premiumization: Focus remains on high-margin variants like Gur Chyawanprash, Ratnaprash, and Sugar-free variants (13-14% of category). Activ 100% juices and coconut water are scaling rapidly to improve beverage margins (Mohit Malhotra).
• Digital-First NPDs: New Product Development (NPD) accounts for 2-3% of revenue. Successful launches include Shilajit resins/drops, Ghee (+33% growth), and edible oils (+50%), predominantly scaling via E-commerce (Mohit Malhotra).
• Distribution & Rural Focus: Rural continues to outperform urban, though the gap has narrowed from 600 bps to 300 bps. Management noted consumer confidence is improving as CPI inflation reins in (Mohit Malhotra).

Guidance & Outlook

Risks & Constraints

Q&A Highlights

Hair Oil Performance

• Question: What drove the strong double-digit growth in Hair Oils, and is it sustainable? (Abneesh Roy)
• Answer: Growth was primarily value-driven due to 100% inflation in coconut oil leading to price hikes. Volume growth in the category remains muted at 3-4%. Perfumed hair oils grew 16-17% (Mohit Malhotra).

Margin Outlook for FY27

• Question: Will lower sales growth due to lack of pricing impact absolute EBITDA? (Percy Panthaki)
• Answer: No. We expect a mix of volume and price rollover. We will reinvest gross margin gains into advertising while returning 20-25% of that expansion to operating margins (Ankush Jain).

Chyawanprash Disconnect

• Question: Why is there a gap between primary and secondary sales? (Abneesh Roy)
• Answer: Tertiary sales grew 11%, but primary was flat as we avoided pre-season loading to clear old stock. Q4 will see high double-digit growth on a lower base (Mohit Malhotra).

US Litigation Costs

• Question: What is the update on litigation costs impacting margins? (Mihir Shah)
• Answer: Litigation costs have reduced by ~25% over the last 3 years. We expect costs to stabilize at these lower levels from next year onwards (Ankush Jain).

Key Takeaway

Dabur India reported a resilient Q3 FY26 with 6.1% revenue growth, navigating a complex GST transition and inflationary pressures in raw materials like coconut oil. The company achieved a historic 20% volume market share in hair oils and maintained double-digit growth in oral care, fueled by a 530 bps outperformance in the herbal segment. Profitability remained robust as PAT grew 10.1% YoY, supported by calibrated price increases and cost-saving measures. Strategically, the company is pivoting toward a volume-led growth model for FY27, targeting high single-digit topline expansion while aiming to restore operating margins to the 20% mark. While seasonal dependencies in beverages and competitive intensity in oral care remain watch points, the management’s focus on premiumization (Activ juices, Shilajit resins) and rural distribution provides a stable floor for sequential recovery. Forward outlook remains positive as GST-related inventory corrections conclude and rural demand continues to stabilize.