India's Dabur drops after forecasting first revenue decline in 4 years

(Reuters) - Shares of Dabur India fell as much as 7.8% on Thursday, after the consumer goods maker forecast its first quarterly revenue decline in four years, citing weak demand in its food and beverages segment.

The stock was last down 5.4%, on track for its worst day since mid-March 2022, and was the top loser on the Nifty FMCG index which was down 1%.

Dabur on Tuesday said it expects revenue to fall in the mid-single digit percentage range for the quarter ended Sept. 30 as heavy rain and floods across parts of the country impacted "out of home" consumption.

The food and beverage segment contributes around 30% to Dabur's revenue. This would mark the company's first decline in revenue since the quarter ended June 2020, according to LSEG data.

The company faced a buildup of inventory and had to reduce channel inventory to boost distributor interest, said analysts at Antique Stock Broking.

Further, Dabur maintained its investment in brands, leading to a decrease in its operating margin to the mid-to-high teen percentage, the analysts said.

Dabur has "relatively underperformed" compared to its rivals, said analysts at Emkay Research, adding that they expect the underperformance to continue in the near term.

Marico said on Wednesday it expects second-quarter consolidated revenue to grow in high single-digit percentage.

Despite destocking likely to be a one quarter phenomenon, it materially impacts Dabur's fiscal year 2025 growth and margin outlook, said analysts at Systemetix Institutional Equities.

(Reporting by Ashna Teresa Britto in Bengaluru; Editing by Varun H K)