Dabur India Limited is among top four FMCG companies in India which offers consumer products such as hair care products, oral care products, healthcare products and food & beverages products. It has market leadership in the Honey, Chyawanprash, Air fresheners, Mosquito repellant creams and Juices in domestic business segment. The company has a large presence in rural India particularly in the northern and eastern part of India. Additionally, it has a substantial presence in the Middle East, North America and SAARC, which contributes about 25% of its overall revenue.
| Recommendation | PRICE RANGE | Target Price | Time Horizon |
| Accumulate | Rs. 480.00 -505.00 | Rs. 625 | 12 Months |
Stock Details |
|
| Market Cap. (Cr.) | 94547 |
| Equity (Cr.) | 177.20 |
| Face Value | 1 |
| 52 Wk. high/low | 597 / 504 |
| BSE Code | 500096 |
| NSE Code | DABUR |
| Book Value (Rs.) | 53.54 |
| Industry | FMCG |
| P/E | 52.72 |
Share Holding Pattern % |
|
Promoter |
66.24 |
| FIIs | 16.78 |
| Institutions | 11.78 |
| Non Promoter Corp. | 0.27 |
| Public & Others | 4.93 |
| Government | 0.00 |
| Total | 100.00 |
Key Investment Rationale:
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Dabur is a competitive player in the domestic market owing to its positioning as an Ayurvedic products company with a focus on herbal and natural products in the healthcare and personal care segments and a strong presence in the juices area. Furthermore, company’s international presence mitigates risk to its business model in case of demand slowdown in domestic market.
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The company has continuously observed higher growth in rural regions compared to urban regions; In the Q3FY24, Rural growth stands at 6-6.5% compared to urban growth of about 5%. This revenue growth outperformance is expected to continue in the near future due to an improving volume trajectory and the absence of any impact from price reductions.
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In the Q3FY24 results company announced capex of Rs.135 Cr. to establish a new Greenfield plant in South India and expanding the capacity for Red Toothpaste, Odonil, and Honey. Additionally with an eye on upcoming summer season, Dabur is expanding its beverage plant capacity through setting up a new plat in Indore for the drinks segment and in Jammu for aerated beverages.
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Company’s Food & Beverages (F&B) business is demonstrating strong growth of 13% CAGR in the past 4 years which was driven by a 12.4% CAGR in the beverages segment and a 19.2% CAGR in the foods segment. The company is focused on to double the revenue from F&B business over the next five years. It is planning to expand the presence of recently acquired Badshah brand from the core markets of Maharashtra, Gujarat, Telangana and Andhra Pradesh to MP and Rajasthan.
Outlook:
Dabur India’s domestic business is expected to continue its growth momentum in the upcoming quarters, driven by market share gains in key categories, strong product launches and expansion in distribution reach. Company’s Healthcare, Home, and Personal care segments are expected to grow at high single-digit to low double-digit rates while Food and Beverages segment is expected to double over the next 4-5 years. Dabur is well placed to benefit from upcoming summer season, rural demand improvement along with moderation in inflation. Hence, we recommend investors to accumulate the company for the target price of 625 with the time horizon of 12 months.
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