Reduce Dabur; target of Rs 470: HDFC Securities

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26 Aug, 2025 12:21

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HDFC Securities' research report on Dabur

Dabur's 2QFY21 saw strong revenue growth, beating our as well as the street's expectations. Domestic val/vol growth was at 20/17% YoY (HSIE 7/10%). Healthcare portfolio clocked stellar 49% growth, led by continued traction for health products. HPC was up by 9% while Food business declined by 4%. Higher rural mix (rural growth was at ~23% YoY) and strong e-commerce growth (up 200% YoY) supported growth. EBITDA margin expanded despite the ramp-up in ASP (up 40% YoY). Company's new launches are increasing essential portfolio as the core portfolio is more discretionary in nature. Dabur's brand positioning (natural and trusted) and the broader portfolio was always exciting, but new energy infused by the CEO (focus on scaling power brands) seems to be a structural change. We increase our EPS for FY21/FY22/FY23 by 4/5/8%.

Outlook

We roll forward our target price to Sep-22E EPS and value Dabur at 42x P/E to derive a target price of Rs 470. However, rich valuation still does not offer the right entry level at CMP. Maintain REDUCE.

For all recommendations report, click here

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