(Reuters) – Consumer goods maker Dabur India reported third-quarter profit above estimates on Thursday, driven by continued demand in its core rural market.
Shares of the company closed 3% higher after the results.
Dabur’s consolidated profit rose 1.6% year-on-year to 5.22 billion rupees ($60.29 million) for the three months ended Dec. 31.
Analysts, on average, expected a profit of 5.15 billion rupees, according to data compiled by LSEG.
A slew of festivals celebrated by Indians during the reporting quarter contributed to higher rural consumption, although a slowdown in urban consumption remained an overhang on growth.
Dabur’s rural growth outpaced urban markets by nearly 140 basis points, CEO Mohit Malhotra said in a press release.
The company noted that rural demand consistently outperformed urban markets for the fourth consecutive quarter, supported by favourable monsoons and government welfare initiatives.
Rural markets contribute nearly half of Dabur’s total revenue.
Dabur, known for its “Real” brand of fruit juices, reported revenue from operations grew 3% to 33.55 billion rupees, just short of analysts’ estimate of 33.61 billion rupees.
Revenue from its consumer care division, which contributes 85% to the total revenue, increased 4%.
Consumer goods manufacturers have been grappling with rising raw material costs and weaker consumer demand amid persistently high inflation.
Dabur partially mitigated inflationary pressures by hiking prices in some segments, the company had said in its quarterly update.
Dabur’s larger peer Hindustan Unilever, which gets 60% of its revenue from urban markets, reported a 20 bps drop in third-quarter core profit margin earlier this week, citing subdued urban demand.
($1 = 86.5770 Indian rupees)
(Reporting by Ashna Teresa Britto; Editing by Varun H K)
