Dabur flags up to 200 bps margin hit in Q2 on inflation

Firm expects easing commodity prices to help improve margins in the second half of the year

Consumer goods major Dabur India on Thursday warned that soaring inflation during the second quarter could lower its operating margin by around 150-200 basis points year-on-year, while revenue likely grew in mid-single digits.

"During the quarter, inflation was at peak levels which impacted gross margins," Dabur said in a regulatory filing. However, the maker of toothpaste and packaged juices expects easing commodity prices to help improve margins in the second half of the year.

India's retail inflation accelerated to 7% in August on surging food prices after dipping to 6.71% in July. Consumer price inflation data for September is expected next Wednesday.

Urban markets were driven by modern trade and e-commerce which saw double-digit growth, while rural markets witnessed some pressure in terms of liquidity, it said.

India revenue is expected to grow in mid-single digits, but international business is seen growing in double digits.

Dabur's consolidated revenue grew 8.1% in the June-quarter, with an operating margin of 19.62%.

The company is due to report earnings for the second quarter ended September on October 26.