Reduce Dabur India; target of Rs 520: Dolat Capital Market

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Dolat Capital Market's research report on Dabur India

Dabur’s Q2FY21 results exceed our estimate. Domestic FMCG volumes increased by 16.8% YoY. Growth in the domestic market was driven by health care (+49.3%) and HPC (9.1%) business. Healthcare contribution grew from 32% in Q2FY20 to 40% in Q2FY21 led by 2x growth in Chyawanprash and double digit growth in Honey- indicates change in consumer preferences. We believe that the healthcare category would continue to grow faster post Covid with new launches.

Outlook

We have upward revised our FY21E and FY23E EPS estimates at Rs 9.5 (+13%) and Rs 9.8 (+0.8%) and introduced FY23E EPS estimates at Rs 10.8. We value the stock at 48x FY23E EPS to arrive at a TP of Rs 520. Considering rich valuations, we maintain Reduce; buy on dips.

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