NEW DELHI: Consumer goods major Dabur India has flagged concerns that soaring inflation could lower its operating margin by around 150-200 basis points year-on-year in the second quarter (July-September) of the current financial year, while revenue is likely to have growth in mid-single digits during the same quarter.
“During the quarter inflation was at peak levels, which impacted gross margins. The input cost pressure led to a near-term impact on operating margin, which is expected to be lower by nearly 150-200 bps as compared to Q2 FY23 but will see sequential improvement,” Dabur said in a regulatory filing on Thursday.
However, it expects easing commodity prices to help improve margins in the second half of the year.
Dabur’s consolidated revenue from operations rose 10 YoY to `2,822 crore in the April-June quarter, with an operating margin of 19.62%.
India’s retail inflation accelerated to 7% in August 2022 on surging food prices after falling to 6.71% in July. Consumer price inflation data for September is expected next week. India’s wholesale-based (WPI) inflation eased to 12.41% in August but remained in double digits for the 17th consecutive month India’s central bank, the RBI, in its recent policy meeting has estimated India’s CPI inflation for the current financial year to be 6.7%, with the price gauge seen at 7.1% in July-September, 6.5% in October-December and 5.8% in January-March.
The sharp rise in commodity prices across the world is considered as the top reason behind the soaring inflation in India. India’s being a major importer of items such as crude oil and vegetable oil has limited scope but to pass the increased cost to end-consumers.
“Geopolitical situation continued to impact the business with unprecedented inflation during the quarter. This led to weak demand trends across categories,” Dabur said. It added that the rural markets witnessed some pressure in terms of liquidity.
Inflation remains at elevated level
India’s retail inflation accelerated to 7% in August 2022 on surging food prices after falling to 6.71% in July. Consumer price inflation data for September is expected next week