Buy Dabur; target of Rs 700: Motilal Oswal

Motilal Oswal's research report on Dabur

Dabur’s 2QFY25 performance was largely in line with our estimate. Consolidated revenue declined 5% YoY (in line) primarily due to a temporary adjustment in General Trade (GT) inventory because of the growth in emerging channels. India revenue declined 8% YoY, while secondary sales grew by 2%. Urban demand has moderated (MGT expects bottoming out), with rural demand outpacing it by 130bp in secondary sales. International business grew 13% YoY in CC terms. Home & Personal Care/Healthcare/F&B’s reported sales declined 8%/10%/ 21% YoY, while Home & Personal Care/Healthcare’s secondary sales grew 6%/4% but F&B’s sales dipped 11% YoY. In secondary sales, oral care grew by 5% (lower than peers after a long time), while home care achieved robust growth of 9%. The digestives segment increased 9% YoY, and foods posted a strong 21% growth. Beverages declined 12% YoY due to heavy rainfall. Badshah continued its strong trajectory with 15% growth.

Outlook

With external drivers remaining consistent, we view the recent stock price correction as an opportunity to be constructive on the stock. Once the company’s growth trajectory improves, we expect a re-rating potential in the stock. We reiterate our BUY rating on the stock with a TP of INR700 (premised on 50x P/E on Sep’26).