Accumulate Dabur India; target of Rs 588: East India Securities

East India Securities' research report on Dabur India

Dabur is a 138 year old company which started operations as an Ayurvedic company. Today, it is a diversified company with operations across i) Healthcare (25% of sales) spanning Chyawanprash, glucose, honey, some ayurvedic OTC products, ii) Home & Personal care (34% to sales) spanning oral care, hair oils, shampoos, skin care and homecare; iii) Food & Beverages (12% of sales) spanning fruit juices, pastes used in food, milk drinks. Besides this, Dabur has a large iv) International presence with sales across MENA, USA, Turkey (26% of sales). Dabur’s revenue & EBITDA have grown at a CAGR of 8.9% and 8.7% respectively over FY18-22. This is in spite of there being 2 COVID years in between which severely disrupted supply chain and consumption. Dabur is a professionally managed company. Like other FMCG companies, it has a big umbrella brand in Dabur, has a large distribution network, is a low capex company, is a large dividend distributor, generates huge cash every year.

Outlook

We assign ACCUMULATE rating with target price of Rs 588 per share.