Prabhudas Lilladher's research report on Dabur India
Dabur reported in-line numbers impacted by seasonal delays, geo-political headwinds & softness in urban demand. Summer-centric portfolio (Real, and Glucose) dragged growth given weather anomalies whereas Gulabari, Chyawanprash, Honitus, Hajmola delivered double-digit growth. Dabur is looking at corrective steps in Beverages, introducing modern format products in healthcare and innovations in Digestives. However, we believe that the recovery would be gradual given heightened competitive intensity in some of these segments. We expect strong growth in 2Q/3Q on a low base and expected improvement in urban demand even as rural demand recovery is on course. Debur is experiencing 7-8% input cost inflation and would need to take price increases to ward off the impact, which can impact volumes to some extent. We estimate 9.4% Sales CAGR & 9.3% PAT CAGR over FY25-27 on a low base (affected by slowdown and inventory destocking).
Outlook
Dabur currently trades at 43.4xJuneFY27 EPS, which leaves little room for significant re-rating. However, given low base and expected demand recovery, retain Hold with a target price of Rs524 (43xJune27 EPS).
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