Dabur India Limited (DABUR) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Q1 Results Investors Conference Call of Dabur India Limited. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Rahul Sarawagi, Head, Investor Relations and M&A. Thank you, and over to you, sir.

Good evening, ladies and gentlemen. On behalf of the management of Dabur India Limited, I welcome you to the earnings conference call pertaining to the results for the quarter ended 30th June 2026. Present here with me are Mr. Mohit Malhotra, Global Chief Executive Officer; Mr. Ankush Jain, Chief Financial Officer; Mr. Herjit Bhalla, CEO, India Business. We'll start with an overview of the company's performance by Mr. Mohit Malhotra, and this will be followed by a Q&A session. I will now hand over to Mr. Mohit Malhotra. Thank you.

Thank you Rahul. Good evening, ladies and gentlemen. We welcome you to Dabur India Limited's conference call pertaining to the results for the quarter ended 30th June '26. The Indian consumption environment remained stable during the quarter despite weather-related disruptions, inflationary headwinds and geopolitical disturbances. Rural demand continued to demonstrate momentum, outperforming urban markets. War-related disturbances in the Middle East impacted input cost trends and supply chain efficiency across our businesses, including India. Despite the challenging environment in the quarter, our international business delivered double-digit growth, supported by proactive market interventions and agile execution. Against this backdrop, Dabur delivered a strong start to the year. During quarter 1 financial year '27, our consolidated business grew by 10.6%, driven by broad-based growth across both India and international businesses. India FMCG business revenue grew by 9.5%, backed by volume growth of 5%. International business grew by 15.5% in INR terms. Within the domestic business, HPC portfolio continued its strong momentum, recording a 12.3% growth. Our hair care business, including hair oils and shampoos, registered strong double-digit growth. Hair Oil portfolio grew in high teens year-on-year with both perfumed and coconut oils growing in double digits. We outpaced category growth and gained 102 basis points in market share. The shampoo portfolio delivered strong double-digit growth during the quarter. During this period, Vatika launched Bio-Infusions range, India's first no-added salt shampoo range, reflecting our commitment to science-backed innovation and evolving consumer preferences. We continue to drive growth through a combination of premiumization, innovation and expanded participation in high-growth segments across both hair oils and shampoos. The Oral Care portfolio delivered near double-digit growth, led by strong momentum across the Red franchise, Meswak and the Dabur Herbal range. Lal Dant Manjan also posted a double-digit growth during the quarter. Consumer preferences for ayurvedic, herbal and natural oral care solutions continue to strengthen with herbal segment outperforming the non-herbal segment by 550 basis points. Supported by our strong portfolio in this category, we outperformed the overall toothpaste market growth and further strengthened our market share position. Skin Care portfolio registered a high single-digit growth driven by Gulabari franchise and OxyLife. The OxyLife de-tan range continues to gain traction among the consumers, reflecting the relevance of our premium skin care offerings. The Home Care portfolio delivered mid-single-digit growth led by Odonil and Sanifresh. Odonil despite shortages in RM availability, posted a high single-digit growth during this quarter, aided by strong momentum in aerosols and zippers, translating into market share gain of around 80 bps. Our recently launched camphor cones and car fresheners have also witnessed encouraging consumer acceptance. Sanifresh continued the strong momentum, delivering a growth in high teens. In our Health Care portfolio, health supplements grew in low single digits. Honey performed very well with high single-digit growth, resulting in gain in market share of 150 bps. Premium variants like Sundarban and Organic Honey witnessed good growth. Glucose portfolio was marginally impacted during the quarter on account of unseasonal rains at the beginning of the quarter and have since seen strong recovery in the second half of the quarter. In the Digestive portfolio, Pudin Hara franchise registered a double-digit growth. Recently launched Pudin Hara [indiscernible] fizz has also witnessed encouraging consumer response. Hajmola franchise registered a near double-digit growth, supported by packaging refresh across the portfolio. Isabgol registered a strong double-digit growth. Within OTC and Ethicals, Honitus registered a strong double-digit growth of 25%, driven by targeted media campaign reflecting and highlighting safety and efficacy. Health juices continued on a strong trajectory and grew in mid-20s. Our recently launched new age nutraceutical brand Siens grew 3x during the quarter. Our food and beverage portfolio registered a high single-digit growth. Despite unseasonal rains in the beginning of the quarter impacting April, our beverage portfolio made a strong comeback in May and June with mid-teens growth. Our premiumization strategy continued to deliver strong results with active juices growing by over 40% and coconut water registering a growth of over 70% during the quarter. We continue to outperform the category, gaining around 600 bps market share in active juices and 344 bps in coconut water. Our Foods business continued strong double-digit growth of around 30%. Badshah business registered a volume-led double-digit growth. Coming to international business, despite continued impact of war, we registered strong growth of 15.5% in INR terms. This was on back of around 9% growth in MENA region, 22% growth in U.K., European Union, 28% growth in Egypt, 27% growth in Turkey and 34% growth in Bangladesh. Coming to profitability now. Despite elevated inflation across several input categories and continued cost pressures in most international markets, we delivered a healthy margin performance through a combination of portfolio premiumization, productivity improvement initiatives and disciplined cost management. As a result, operating margin grew by 11% and profit after tax increased by 15%, both ahead of the top line, reflecting the strength of our brand portfolio, execution capabilities and resilient business model. Looking ahead, while geopolitical developments in the Middle East continue to warrant a close monitoring, we remain confident of delivering a sequential acceleration in revenue growth. Stable consumption trends, our go-to-market transformation initiative, Saksham, focused investment in premiumization and innovation and sustained brand building efforts position us well to drive profitable growth in the quarters ahead. With this, I conclude my address and open the floor for any Q&A. Thank you.

[Operator Instructions] First question comes from the line of Abneesh Roy with Nuvama.

I have 3 questions. My first question is on Badshah. So if you could tell us in the last few years since the acquisition, have you managed to add good presence in any new state? Because I understand at the time of acquisition, it was, I think, only 2 states. So if you could discuss expansion in any other state apart from that, are you happy with the performance? Because ideally, double-digit volume growth for this kind of a business would have been a more desired number given it was in just a few states. So, if you could tell us what else is needed? It's a good category. A lot of players have come in. Is there a differentiation issue because a lot of -- almost every listed food company has a presence in this? That is my first question.

I think our Badshah business continues to trend well on a double-digit growth trajectory backed by double-digit volume growth in the domestic market and also international. I don't know whether you heard our Badshah business has actually grown by 13.3%, backed by roughly around 11% kind of a volume growth, which is there in the domestic business. So, we are pretty happy because there is no price increase here in Badshah. Most of the spices are actually deflationary, and all this growth is coming on back of volume. That said, the international business is also growing by more than 40% in Badshah. We were present, you're right, we're present in 2 states, Gujarat and Maharashtra. We've expanded beyond Gujarat and Maharashtra to MP, Rajasthan and now to Delhi NCR. So that's significantly picked up, and there's a good traction that we are seeing despite taste being a little disparate in these areas. But because of quick commerce and e-commerce, I think the business has substantially picked up. Now the total contribution of e-commerce and quick commerce, which is helping us to taking the brand beyond these 2 states is almost 6% of the overall turnover, and it is growing at triple digits e-commerce for us as we are listing in more and more dark stores. So we are pretty happy with the Badshah performance. The margins have also expanded and the growth continues on a double-digit trajectory, which is what we have decided at the time of the acquisition. When we acquired the business was roughly around… INR 220 crores. Now the business is trending at around exit of around INR 400-odd crores. So I think pretty happy with the performance.

I was of the understanding that there is severe inflation, especially, I think, in chilly and some of the other flavors, maybe that's not too much relevant for your SKUs. My second question is essentially on your 2 problem categories. So I wanted to get more insights there. So yes, I do understand April month was challenging. Yesterday, Varun Beverages also said that April month, their growth was flat and then spectacular recovery in May and June, which you also, I think, said for your fruit juice business. So here, the question is, did Glucose also see recovery in May and June? Or is there a shift of customers because obviously, Glucose is pure sugar and obviously, not exactly great from a health perspective, and there are so many options of energy drink, this thing, that thing. Customers definitely has more options versus say, 5 years back. So is there a structural worry for Glucose? And did you see great recovery in May and June? I think that will answer whether there is a structural issue. And coming back to juice business, again, Campa-Cola impact is very disruptive. Plus I think in your packaging, I think there was a fruit juice overall, how you can write 100% fruit juice and all that. So if you could tell us, is the big issue in the fruit juice growth now behind us? So can last 2 months growth be the new normal or still here every month, every quarter is a new time period to analyze?

Right. So on these 2 categories, Glucose is a business, like you rightly said, Abneesh, it bounced back after April. In May and June, we saw mid-teens growth and high teens growth, actually both in Glucose and also juices. So I think season plays a very big factor. As far as Glucose is concerned, it's more of a rural consumption. And therefore, sugar is not an issue. It's consumed for [indiscernible] and it's consumed for instant energy, especially when the summer and the heat is there. Out-of-home consumption is very high in terms of Glucose, especially in rural areas of Bihar, West Bengal, Orissa and Hindi belt. And it continues to do well in the May and June, it's a mid-double-digit growth. And so is the case in juices. And like I told you in juices, 100% juices grew by around 45% and our coconut water grew at around 70%. Our fizz portfolio also grew by around 30%, 35%, driven by Hajmola Fizz as a brand and other fizz portfolio. Nectar also turned profitable in the second half of the quarter when the summer actually started. So I don't think there's any problem in these 2 categories. It is a season which plays havoc. And that's why you saw overall food and beverage growth was around 8%, so which is pretty healthy and despite April not being very good. So -- and [ex Glucose], our health care also grew by roughly around 7%.

So last question, essentially, Mohit. So if I see clearly, you have earmarked INR 500 crores for D2C kind of acquisition. So what will be the time period for using that? Is there a frozen time period because this is slightly depending upon what is available and this is obviously going to be up for negotiations, et cetera. And second is in terms of innovation -- disruptive innovation, I'm not talking about regular brand extensions. If you could give us what have been the big innovations which have -- which you are quite happy with in the last, say, few quarters, disruptive innovations where you have also managed some level of scale currently?

Right. So as you know, our acquisition strategy is two-pronged. One is to get a foot in the door in new D2C players with a minority stake, work with the promoter, see the returns profitable. And once it turns profitable, then claw to a majority stake, and that's what we are doing. We are continuously on the lookout for acquisition targets, which are not obscenely expensive and which are making sense and which are synergistic to our entire portfolio. So that's what we look at. So we are continuously on the lookout as we speak, also we're talking to 2 or 3 companies. And like you rightly said, while we have a target set for ourselves that we have a vision period of around 3 years now. So in 3 years, we should be acquiring 1 or 2 companies which will be sizable. And that's the target that the management has actually taken, but it all depends upon negotiations which actually happen because most of these D2C companies run a process. And as a process, you participate in the bid, but you can't guarantee the success. So that's where you are. So while we have targeted ourselves, there's a commitment to do the number, but it all depends upon the negotiation. That's the first part of your question. As far as the second part of your question on disruptive innovation, I think we are very happy with the innovation that we've done in health supplements and the nutraceutical space. We launched a brand called the Siens. And last year was the first year towards the fag end of the year, we launched it. And we will see an exit of roughly around INR 50-odd crores of ARR that we will have at the end of the year with Siens. The brand is month-on-month doing well, and we are seeing it as a D2C disruptive health care play for us. This is besides innovation that we are doing in every respective category that we are present in, be it hair care, be it shampoos, be it home care or be it skin care and honey, et cetera. So those innovations to extend the life cycle of the brand and to bring in new news is happening. But this is one that I can definitely call out as the disruptive one as Siens.

Sir, one last follow-up Mohit, is Mr. Herjit Bhalla there on the call. If he is there...

I am very much there…

Herjit, you want to say hello and you want to tell us what happened. You can hear it from the horse's mouth. So he's right here with us…

Three months of [Dabur] Herjit, what is the initial analysis? What are you seeing as strong points? What can be the areas of improvement? What will be the framework, what will be the focus areas? If you can highlight 3 months is a short time, but you come from extremely strong pedigree of Unilever, Hershey's, et cetera. So if you could tell us what are your initial thoughts?

And firstly, thank you for the warm welcome. It seems very great speaking to all of you. Yes, closing in on 3 months and delighted to be part of this iconic organization. And at this stage, the focus has been completion of induction, a lot of listening, a lot of learning, a lot of connecting great people across the board. right? And my take on strengths is very similar to what we would see Dabur as iconic brands. The distribution might that is a strong [moat] for us, the passion of the people and the love or trust of the consumers are clearly something that has stood us in good stead. I'd also say that it's been a good first quarter of my journey here, the results that are being shared are reflecting the consistency almost of the last 3 quarters. So at this stage, this is what I would be happy sharing and would look forward to coming back and talking in more detail later in the year.

Our next question comes from the line of Aditya Soman with CLSA.

Two questions here. So can you give us a sense of the volume growth in the sort of hair oil business and how that shapes up just given very sharp inflation in prices there? And secondly, going forward, as the sort of base gets tougher, what sort of growth do you expect for the rest of fiscal '27?