Dabur Glucose and Chyawanprash to boost its immunity in the times of coronavirus
- Dabur is expected to see around 11% dip in its profit, compared to the same quarter last year.
- According to HDFC Securities, Dabur’s Glucose and Chyawanprash saw market share gains, with Chyawanprash market share increasing by 4% of its pre-COVID level.
- Dabur’s share price has gained only about 5% since March 31.
The quarter under review was different from normal for Dabur as the summers usually do not witness such demand for its ayurvedic products. The company said it recorded strong growth in enquiries and demand for its Ayurvedic products across its portfolio, including Chyawanprash, a dietary supplement— based on Ayurvedic texts — that has everything from sugar, honey, ghee, Indian Gooseberry (amla) jam, sesame oil, berries to various herbs and spices in the past three months.
According to HDFC Securities, Dabur’s Glucose and Chyawanprash saw market share gains, with Chyawanprash market share increasing by 4% of its pre-COVID level.
Supply chain disruption impacted all
This lockdown due to COVID-19 pandemic has disrupted the supply chain for almost every fast-moving consumer goods company, and Dabur wasn’t immune to it either. Unlike Britannia, Dabur doesn’t have a strong direct distribution model, and as a result it faced many constraints. The pent up demand for its ayurvedic products is expected to help it steer through difficult times. However, the lost sales will still have a considerable impact on its profit, according to reports.
According to various analysts reports, Dabur is expected to see around 11% dip in its profit, compared to the same quarter last year.
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The company during its fourth-quarter earnings also said that “The nationwide lockdown ordered by the government of India has resulted in a significant reduction in economic activities and also the business operations of the company in terms of sales and production.”
And that is the reason why the stock hasn’t seen a rally in comparison to its peers. The stock has gained only about 5% since March 31.
But Arihant Capital thinks that the inventory may fare out better after the government eased restrictions on essentials. “Many products of the healthcare range were earlier not part of essentials, but the government later included them into essentials. Therefore, the healthcare range can do well in the coming quarters. ”
The coronavirus pandemic has brought a massive change in consumer lifestyles— which saw a large shift towards Ayurvedic medicines and products, according to Euromonitor International. A wave of Indian consumers who prefer tags like organic and ayurvedic products are sweeping products like the Chyawanprash off the shelves.
According to Motilal Oswal report, Dabur’s total distribution reach stands at 6.4m outlets, including direct reach at 1.2m. The company aims to increase direct reach to 1.5m outlets over the next couple of years, which would be a key advantage.
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