Dabur India beats first-quarter profit view on rural demand strength, retail expansion

Dabur India reported first-quarter profit above estimates on Thursday, benefiting from strong demand and as it expanded its retail footprint in rural areas.

The company reported a consolidated net profit rose 3% to 5.14 billion rupees ($58.69 million), from 5 billion rupees a year ago.

Analysts, on average, were expecting a profit of 4.95 billion rupees.

Indian consumer companies have battled margin pressures for several quarters, as elevated living costs and muted urban wage growth squeezed discretionary spending and commodity costs rose.

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Rural demand, which has grown faster than urban for several quarters, has cushioned some of the impact.

This helped the company post a consolidated revenue growth of 1.7% year-on-year to 34.05 billion rupees.

“While urban markets..have shown signs of sequential improvement, it still lags rural growth,” CEO Mohit Malhotra said in a press release.

Additionally, Dabur, like other consumer majors such as ITC and Nestle India, has been expanding its distributional footprint in rural areas.

Its direct reach was higher by 63,000 outlets year-on-year in the first quarter, reaching a total of 1.52 million outlets.

Dabur logged growth in categories such as its namesake honey, housed in the healthcare segment, and its toothpastes, air fresheners, and hair care oils, which are part of the home and personal care segment.

Shares of the company closed 1.3% higher on the day, tracking a broader rise in the consumer stocks index, which closed 1.44% higher.

Rival Hindustan Unilever also reported profit growth, in part due to the ongoing recovery in rural sales.