Hold Dabur India; target of Rs 561: Prabhudas Lilladher

Prabhudas Lilladher's research report on Dabur India

Dabur reported in-line numbers with tepid volumes, given tepid urban demand even as rural continued to grow ahead of urban. Delayed winters affected healthcare portfolio while muted festive demand affected beverages portfolio (nectars in particular). Dabur is looking at corrective steps in Beverages (Distribution margins, price cuts), innovations in Hair oils & Chyawanprash and fill product gaps in oral care. With likely price hikes to cover 5% input cost inflation (3% earlier), sales growth is expected to pick up. Dabur has hired McKinsey to navigate category growth challenges and urban demand slowdown.

Outlook

We estimate 10.8% Sales CAGR & 13.5% PAT CAGR over FY25-27 on a low base affected by slowdown and inventory destocking. Dabur is trading at 40.2x Mar27 EPS which is at 5% discount to LPA of 42. We value the stock at 43.5xDec26 EPS and assign a target price of Rs561. Retain Hold.