Buy Dabur India; target Rs 122: R K Global

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Buy Dabur India; target Rs 122: R K Global

R K Global is bullish on Dabur India and has recommended to buy the stock on dips for a target price of Rs 122, in its December 19, 2011 research report.

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RELATED NEWS Sell Bank of India December future; target Rs 290: IIFL Buy Bank of Maharashtra; target Rs 52: Angel Broking Buy Godrej Industries; target of Rs 212: IIFL ALSO READ See previous views by R K Global See what other Experts & Brokerages are saying about Dabur India See messages about Dabur India Dabur India BSE | NSE 01/06/12 Are Mutual Funds betting on Dabur India?

R K Global is bullish on Dabur India and has recommended to buy the stock on dips for a target price of Rs 122, in its December 19, 2011 research report.

"Dabur India enjoys very strong brand equity. It also has wide distribution network covering 2.8 mn retailers across the country. Dabur has been also increasing its geographical presence and for the same it has adopted the strategy of localizing. Moreover the recent dive into the professional grooming products market with its 'Fem' brand, looking to grab about ~5-10% share of the professional grooming market in two years is expected to auger well for the company."

"The company has entered into the professional grooming products market with its 'Fem' brand (acquired in FY'09 for Rs 2,500 mn), looking to grab about ~5-10% share of the professional grooming market in two years. In this regard, the company has created a sales-force of 200+ people and is in process of placing the products in around 30,000+ parlors across the country. The company has introduced a range of facial kits, like, Fem Gold Professional Facial Kit and Fem Queen's Pearl Professional Facial Kit, which it will sell only through beauticians in parlors and salons. Apart from the two products, the firm is also eying to expand the portfolio with plans to launch body bleach under Fem brand. As part of its promotional activities, the new range will be endorsed by a leading film actress, who is presently the brand ambassador of all its Femcare range of products. Keeping in mind the pent-up demand of winter products, we expect the Q3 & especially Q4FY'12E to be more vibrant as the company is closing towards the ~10%+ Mshare mark from its professional grooming market with its newer launches."

"We expect the next 2Qs of FY'12E to place a little strain on the margins and bottomline on the back of higher operating expenses (advertisement and raw material costs) and higher interest costs, respectively. However, we believe the growth in earnings would be back in FY'13E with more up-front products and scalability from its overseas revenues. At CMP, the stock trades at a P/E & P/BV of ~19.2x and ~8.0x of FY'13E EPS of Rs 5 and BVPS of Rs 12. The stock is relatively undervalued and thus makes it an attractive BUY at the current valuation. Thereby, we reprise a BUY on the Dabur India stock with a revised TP of Rs 122 (potential upside of ~21.3% from current levels), using a P/E & P/BV of ~24.4x and ~10.1x, factored out of FY'13E EPS of Rs 5 and BVPS of Rs 12. We advise BUYING on dips," says R K Global research report.

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