Dabur India shares tumble 8% after Q2 update signals revenue decline

New Delhi: Shares of FMCG firm Dabur India Ltd on Thursday slumped nearly 8 per cent after the company said its profitability in the second quarter will be impacted due to low primary sales with heavy rain and floods in parts of India affecting out-of-home consumption and consumer offtake despite demand trends saw some improvement.

The stock tanked 7.69 per cent to Rs 571.25 on the BSE.

At the NSE, it declined 7.75 per cent to Rs 571.

In its quarterly update shared on bourses on Tuesday, Dabur India said it expects to post a mid-single-digit decline in consolidated revenue for the second quarter due to a correction in distributor inventory in the general trade (GT) channel.

"While demand trends were witnessing some improvement, heavy rain and floods across parts of the country impacted out-of-home consumption and consumer offtake in Q2 FY25. Due to this, we saw some impact on our business especially in the beverage category," the company said.

Dabur India said during the last few quarters there has been "disproportionately higher growth" in organised channels such as modern trade (MT), e-commerce, and quick commerce, which has led to an increase in inventory levels in the General Trade (GT) impacting the Distributor Return on Investment (ROI).

"The company has taken an important strategic decision to correct distributor inventory in the GT channel and improve their ROI. This proactive step, while leading to a temporary decline, is essential for the long-term health and hygiene of our business," it said.

On account of this correction, Dabur said, "The company is expected to post a mid-single-digit decline in consolidated revenue for the quarter." While this correction has happened in the Indian business, the international business is expected to register "double-digit constant currency growth in topline", the company said.