Global brokerages bullish on Dabur after strong Q1 show, see 10-22% upside

Shares of Dabur India gained nearly 2 percent intraday on July 22 as global brokerages remained bullish on the stock, citing strong earnings growth even though management commentary was cautious about demand outlook ahead.

The stock was quoting at Rs 426, up Rs 5, or 1.19 percent on the BSE at 1212 hours IST. The brokerages expect the stock to return 10-22 percent over a period of one year.

The FMCG major beat analyst expectations on all parameters in June quarter showing a 9.6 percent growth in domestic volume against street expectations of 4 percent.

Profit grew 12.6 percent and revenue 9.3 percent compared to year-ago quarter. At the operating level, earnings before interest, tax, depreciation and amortisation (EBITDA) surged 18.5 percent and margin expanded 150 bps year-on-year in Q1.

Brokerage: Morgan Stanley | Rating: Overweight | Target: Rs 470

The brokerage retained 'overweight' rating on the stock with a target price at Rs 470 per share as both domestic and international businesses have performed above its expectations.

Overweight rating is premised on relative value and portfolio mix. Visibility of near-term revenue/earnings growth is ahead of market expectations.

Brokerage: Jefferies | Rating: Buy | Target: Rs 480

The brokerage maintained buy call on the stock with a target price at Rs 480 per share, citing strong Q1 with positive surprise on domestic volume growth.

EBITDA margin was ahead of its estimates. Quarterly volatility may persist given macro consumption headwinds and competition, it feels.

Brokerage: HSBC | Rating: Buy | Target: Rs 480

HSBC retained its buy call and raised price target to Rs 480 from Rs 460 per share as volume growth and EBITDA were significantly ahead of consensus.

Valuation looked reasonable and operating momentum is the key catalyst for Dabur, HSBC said.

Brokerage: CLSA | Rating: Buy | Target: Rs 515

Dabur's commentary was cautious as momentum weakened in June but its medium-term strategy continued to be impressive, CLSA said.

Near-term concerns prompted CLSA to take EPS down by 2-4 percent but it retained buy call on the stock with a target price at Rs 515 per share.

Brokerage: Citi | Rating: Buy | Target: Rs 485

Citi retained buy call on the stock with a target price at Rs 485 as Dabur reported solid all-round beat in Q1.

Business should deliver decent growth despite a challenging macro, it added.

Brokerage: BNP Paribas | Rating: Buy | Target: Rs 465

The brokerage maintained its buy call on the stock with a target price at Rs 465.

It expects rural consumption to recover in the second half of FY20 and believes the company's FY20 guidance of mid/high-single digit volume growth is conservative.

It raised FY20-22 EPS estimates marginally by 1 percent.

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