Prabhudas Lilladher's research report on Dabur India
We are decreasing FY22/23 EPS estimates of Dabur India by 8.0%/5.7% on back of 1) higher tax rate guidance of 21.5-22% (18-18.5% earlier) 2) lower than expected growth in Health Supplements and Healthcare and 3) no margin expansion given input cost pressures. Dabur remains cautiously optimistic given that unlike last year, localized lockdowns would not impact discretionary portfolio and sharp pick up in immunity boosting products demand from 2nd half of April. We believe that the company will be able to sustain double digit sales growth led by 1) Robust growth and market share gains in Honey and Chawyanprash (60%+), 2) Market share gains in Oral care (2-3x category growth) 3) Strong brand recall in OTC 4) New product development (5-6% of topline) and 5) Cost saving initiatives like Project Samruddhi (savings of Rs 1.0bn in FY22). We estimate 13.5% PAT CAGR over FY21-23.
Outlook
We value the stock at 43x FY23EPS (earlier Rs 550, 42xFY23E) to arrive at target price of Rs531. Expect near term underperformance, although long term outlook remains intact. Downgrade to Hold.
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