Dabur is facing adverse growth conditions

The immediate concern is the impact of various headwinds on rural demand. Analysts at Systematics Research, led by Dhananjay Sinha, say the country’s rural economy faces the twin risks of a deficient monsoon in 2026 and rapidly rising input costs, threatening agricultural output, farm income, rural demand and food inflation.

Macquarie Research believes a weak monsoon and fertilizer availability could threaten rural demand and hurt volume growth. Importance of rural sales is highest for Dabur at 45-50 per cent, followed by Britannia at 40-45 per cent. Nestle’s performance in rural areas is the lowest at 20 percent. The brokerage remains cautious on rural-focused plays like Dabur and Britannia.

Exacerbating weather-related risks is the ongoing US-Iran conflict, which has disrupted shipping through the Strait of Hormuz, a vital route for fertilizers, raw materials (ammonia, phosphoric acid, sulfur, natural gas/liquefied natural gas) and fuels. This has led to a sharp rise in global fertilizer and input prices, supply-chain disruptions and higher costs for Indian farmers and manufacturers.

Systematics Research says that although there has already been an impact on fertilizer volumes and margins in the fourth quarter, the real challenge is expected from the first quarter (April-June/Q1) of 2026-27, during the kharif planting season. It is expected for consumer companies to soften rural demand, commodity cost inflation will impact demand, pricing and margins.

Apart from weak rural demand and commodity inflation, the company is also facing pressure on international sales due to its presence in West Asia. West Asia is its largest market outside India, with the Middle East and North Africa (MENA) region accounting for 8 per cent of consolidated revenues. Major categories include hair care, oral care, skin care, health care and food. In export markets, supply shortages, order cancellations, higher freight and insurance costs are expected to be reflected in early Q4FY26, the brokerage says.

For Q4, Dabur’s consolidated revenues are likely to grow in the mid-single digits, led by high single-digit growth in the India FMCG business, while the international business is expected to remain subdued with low single-digit growth. While West Asia will be affected by the Iran war, other markets like Turkey, Bangladesh and the UK have performed well and are likely to grow in double digits in stablecoin terms.

Although domestic macroeconomic indicators point to a gradual recovery in consumption, persistent execution challenges keep Motilal Oswal Research cautious. Keeping in mind the near-term headwinds in Dabur’s international markets, the brokerage has cut its earnings per share estimates by 2-3 per cent.