Hold Dabur India; target of Rs 500: Emkay Global Financial

Emkay Global Financial's report on Dabur India

Dabur’s Q1 sales/PAT declined 13%/11% and came in marginally below expectations on a 22% fall in the international business. The domestic business performed better, with 8% sales decline and 4% PAT growth on strong growth in the Healthcare segment. Cost reduction was better than peers with a 14% decline in domestic overheads. This, along with a 22% fall in ad spends, led to EBITDA growth with a 260bps margin gain. Cost efficiencies and lower competitive spends continue to offer a positive margin outlook. Strong demand for healthcare products, a significant acceleration in new product launches (6% of sales in Q1) to meet current consumer needs and some normalization seen in its discretionary portfolio should drive a faster recovery in the coming quarters, in our view.

Outlook

We like management’s aggressive efforts and initiatives to drive recovery and growth, but await a better entry point as current valuations at 43x FY22E EPS restrict upsides. Maintain Hold with a revised TP of Rs500 (Rs465 earlier), based on 40x Sept-22E EPS.

For all recommendations report, click here

Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

Read More