Dabur share price slips 4% despite strong Q1 performance; here's what brokerages say

Shares of Dabur India declined 4 per cent to hit an intraday low of Rs 586.7 on BSE after the company posted its earnings for the quarter ended June 2021. However, the results were above expectations on all fronts.

The company reported a 28 per cent year-on-year increase in its consolidated net profit for the April-June quarter at Rs 437 crore on the back of higher volumes. Profit in the year-ago period stood at Rs 342 crore.

Revenue from operations grew 32 per cent to Rs 2,612 crore in the June-ended quarter against Rs 1,980 crore a year ago.

The stock ended 4.23 per cent lower at Rs 588 against the previous close of Rs 614. Market cap of the firm fell to Rs 1,03,949.68 crore on BSE.

It has gained 16 per cent in the last one year and risen 10 per cent since the beginning of this year. The share stands higher than 50 day, 100 day, and 200 day moving averages and lower than 5 day, 10 day, 20 day moving averages.

The company said its healthcare business reported a 30 per cent growth in the quarter, while ayurvedic OTC business grew by over 52 per cent. Ayurvedic ethicals business reported a growth of nearly 51 per cent, while health supplements category ended the quarter with a 24.5 per cent growth.
 
The revival in discretionary spending continued during the quarter, which helped Dabur India's home and personal care segment grow by over 26 per cent. Meanwhile, the international business reported 34 per cent growth in constant currency terms.

Motilal Oswal has a 'Buy' rating on the stock with a target price of Rs 715 per share. "The management’s confidence in double-digit sales growth prospects for FY22, despite a challenging base for the Healthcare business in the remaining quarters, and target of maintaining or growing FY22 EBITDA margin YoY, despite the ongoing rise in material costs, is encouraging," it said.

"Earnings growth, after the ongoing investment in these initiatives, will be even stronger than topline growth after completion of the investment phase for the above-mentioned initiatives (and a temporary reset on account of a step up in taxation levels to 22% in FY22 from 17.6% in FY21). We maintain our BUY rating," the brokerage house added.

Prabhudas Lilladher believes that the long term outlook remains positive given 1) Innovation led growth strategy, 2) Increasing share in oral care on the back of growth in herbal category 3) Innovations at a low price point in beverages allowing DABUR to leverage its distribution 4) Cost saving initiatives like Project Samruddhi (savings of Rs 1.0bn in FY22) and 6) Focus on increasing rural distribution to 80k villages in 2 yrs.

"However recent surge in share price more than factors the positives, we assign 'Hold' rating (Under Review earlier) to the stock with a target price of Rs 588," the brokerage firm added.