Buy Dabur; target of Rs 605: Motilal Oswal

Motilal Oswal 's research report on Dabur

Dabur reported a significant beat on the topline and volumes (third highest growth in the past 50 quarters). The Healthcare portfolio fared even better in 2QFY21 (49.3% YoY growth) v/s 1QFY21 (27.7% growth). Notably, Dabur surprised in the Home & Personal Care (HPC) and Food & Beverage (F&B) segments – HPC reported 9.1% YoY growth in 2QFY21 (14.1% decline in 1QFY21), and decline in F&B was restricted to 3.8% YoY (34.2% decline in 1QFY21 and weak numbers for several preceding quarters). While Healthcare may face a higher base from 3QFY21, the performances of the remaining segments (~70% of the domestic portfolio) offer encouragement for future growth.

Outlook

Rich 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 INR605 (50x Sep'22 EPS).

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