Buy Dabur India; target of Rs 700: Motilal Oswal

Motilal Oswal is bullish on Dabur India recommended buy rating on the stock with a target price of Rs 700 in its research report dated October 14, 2024.

Broker Research

October 15, 2024 / 12:51 IST

Buy

26 Aug, 2025 12:21

Volume

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Motilal Oswal's research report on Dabur India

Dabur India (DABUR), in its 2QFY25 preview update, highlighted the impact of heavy rains and floods in parts of the country on out-of-home consumption, particularly for beverages. Besides, the company experienced higher growth in MT, E-commerce, and Quick Commerce during the last few quarters, resulting in high inventory levels for its GT channel. This affected the distributor ROI, and the company made the strategic decision to correct distributor inventory in the GT channel. This led to a temporary decline in revenue in 2QFY25 (which appears to be a high single-digit revenue decline for the India business). However, on the demand front, the commentary was positive across FMCG companies with a promising outlook for 2HFY25. Our checks suggest that high inventory issues in GT are not limited to DABUR but are also experienced by many brands/categories following the success in alternate channels (especially quick commerce). As such, if volume growth in the industry picks up in 2HFY25, we expect that DABUR will also experience accelerated growth.

Outlook

The company has already indicated that primary growth will return to normal from October. With external drivers remaining consistent, we view the recent stock price correction as an opportunity to be constructive on the stock. DABUR is at 16%, 14%, 9%, and 19% discount to HUL, Britannia, Marico, and Colgate, respectively, on FY26E P/E. Once the company’s growth trajectory improves, we expect a re-rating potential in the stock. We reiterate a BUY rating on the stock with a TP of INR700 (at 50x P/E on Sep’26).

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