Sharekhan's research report on Dabur India
Revenues grew by 6% y-o-y (volume growth of 1%); three-year CAGR came in at 10.5% in Q2FY2023. OPM declined by 190 bps and PAT down by ~3% y-o-y. Raw material inflation to moderate in H2FY2023 and hence the OPM is expected to improve sequentially in the coming quarters (expects to be 20-21% for FY23). Saw some uptick in rural demand prior to festive season and sustenance of same will improve revenue growth in the coming quarters. It acquired a 51% stake in Badshah Masala to expand foods business to Rs. 500 crore in next three years. Acquisition will be cash-EPS accretive from FY24. Further planning to do a capex of Rs. 326 crore in capacity expansion, which will add Rs. 900 crore in revenues by FY2027.
Outlook
Stock trades at 48.0x/37.6x its FY2023E/24E EPS. We maintain a Buy on the stock with an unchanged price target of Rs. 675.
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