Buy Dabur India; target of Rs 609: YES Securities

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26 Aug, 2025 12:21

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YES Securities' research report on Dabur India

While volume growth has normalized in last two quarters with 2% each given a high base, 2‐ yr revenue CAGR of 16%/12% in Q4FY22/FY22 indicates Dabur’s portfolio strength and share gains. Resilient growth of 7% in healthcare and strong performance from Foods business on a high base were key positives. Its International business continues to grow in double‐digits except Turkey which is soft. Key negatives were category decline in toothpaste and hair oil driving muted growth, yet company was able to gain market share by 20bps/70bps in Q4. Its brands in healthcare, juices and home care continue with a strong growth momentum. Even on the margin front, despite the unprecedented commodity inflation, the company was able to maintain margins with aggressive price hikes in all segments other than hair oil and strong cost controls. Expansion of addressable market is a key focus area for the company in segments like single herbs, beverages and healthcare. We expect the company to continue delivering industry—leading growth for the next couple of years led by aggressive NPD, distribution expansion and brand extensions. Given the nature of portfolio, pricing power remains strong which should help the company keep spending on A&P despite inflation pressure. While margin pressures make us trim our earnings estimates, Dabur’s increased growth aggression, transformation initiatives, strong rural reach expansion strategy amidst an expanding Ayurveda/herbal market and improving International growth outlook, we maintain BUY, as valuations also look reasonable now post the recent correction.

Outlook

We build in revenue/EBITDA/PAT growth of 12%/13%/14% over FY22‐24E. We trim our EPS estimates by ~6% to incorporate margin headwinds and slightly lower revenue growth assumptions due to rural slowdown and category headwinds in hair oil. But given attractive valuations and possibilities of inorganic growth, we maintain BUY on the stock with a revised PT of Rs609 based on 45x FY24E earnings, in‐line with its 5‐yr average multiple.

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