Buy Dabur India; target of Rs 640: Sharekhan

Sharekhan's research report on Dabur India

Dabur’s Q3FY2023 numbers were weak with muted revenue growth of 3.4% y-o-y to Rs. 3,043 crore. Volume decline stood at 3% (price led growth of 6.5%). A rural slowdown and delayed winter hit performance. High input cost inflation and an unfavourable sales mix led to a 283 bps/129 bps y-o-y decline in gross margin/OPM to 45.5%/20%, respectively; while PAT fell by 5.5% y-o-y to Rs. 477 crore. Revenue and PAT are expected to clock a 13% and 16% CAGR during FY2022-25 backed by sustained market share gains, expansion of distribution network, investments on power brands, new launches and cost-saving initiatives.

Outlook

The stock trades at 40.8x/34.0x its FY2024E/25E EPS. We maintain a Buy on the stock with a revised price target of Rs. 640.

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