Motilal Oswal is bullish on Dabur India recommended buy rating on the stock with a target price of Rs 565 in its research report dated July 30, 2020.
Motilal Oswal 's research report on Dabur India
While results were in-line, ~7% growth in June and July is encouraging. As pointed out in our upgrade note, the structural and medium-term narrative on topline growth is turning highly attractive on account of: (a) strong traction in the profitable Healthcare business, (b) an attractive rural growth outlook (with ~48% of Dabur's domestic sales coming from rural), and (c) a spate of initiatives to boost growth under the new CEO. EPS growth for the current year may be in mid-single digits due to: (a) investments in direct reach, (b) technology and analytics, and (c) support required for new launches. Nevertheless, building blocks are being set up for high growth in subsequent years. Maintain BUY.
Outlook
High near-term valuations appear justified at this initial stage of structural turnaround, which could potentially result in ~20% EPS growth following the investment phase for the current year. Maintain BUY, with TP of INR565 (50x Jun'22 EPS).
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