Buy Dabur India; target of Rs 438: Edelweiss
Edelweiss is bullish on Dabur India has recommended buy rating on the stock with a target price of Rs 438 in its research report dated May 02, 2018.
May 14, 2018 / 07:17 PM IST
Edelweiss' research report on Dabur India
Dabur India’s (Dabur) Q4FY18 revenue (up 6.2% YoY) came in line, while EBITDA and PAT (up 16.2%/19.0% YoY) surpassed estimates led by better-than-expected margin. Domestic volumes grew 7.7% YoY (on a base of 2.4%), indicating initial signs of revival, especially in rural areas, which outpaced urban growth. International business too continued to improve—16.8% YoY constant currency (CC) growth (5.0% /3.9% /-2.2% in Q3FY18 /Q2FY18 /Q1FY18). Dabur clocked multi-quarter high EBITDA margin of 23.9% aided by 167bps YoY gross margin expansion, flat A&P spends and better operating efficiencies. Dabur’s stable-to-expanding market share, waning competition from herbal players and improving rural economy are positives. Maintain ‘BUY’.
We expect the volume recovery to sustain and improve aided by premiumisation, new launches, uptick in rural spending and government’s rural push. Hence, we raise our target multiple to 40x (earlier 38x) to arrive at revised TP of INR438 (INR408 earlier). Dabur continues to remain our top pick in the consumer staples space. At CMP, the stock is trading at 34x FY20E EPS. We maintain ‘BUY/SO’.
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