Dabur Share Price Snaps Four-Session Rally As Brokerages Concerned Over Near-Term Growth

Dabur India Ltd.'s share price snapped its four-session gaining streak as brokerages said they were concerned over the company's near-term growth, following weak commentary in its earnings update for the third quarter.

In an exchange filing, the company said it expects its consolidated revenue to grow in "low single digits" in the October–December quarter, while the margin is anticipated to register a flattish growth, as inflationary pressures continue to weigh.

"While we like the resilience in rural demand, continued weakness in beverages portfolio and the weaker-than-expected 3Q Ebitda margin performance due to inflationary pressures make us concerned about near- term growth rates," Macquarie said. It maintains a 'neutral' rating on the stock, with a target price of Rs 560 per share, implying 7% upside.

The company has built in flattish India sales growth, with underlying volumes down a marginal 1-2%. "Dabur's expectations of flattish Ebitda YoY implies a 60 bps YoY Ebitda margin contraction to 19.9%," Macquarie said.

CLSA has a 'hold' rating on the stock and target price of Rs 582, implying 13% upside. It noted that general trade remained under pressure during the quarter, with channels such as modern trade, quick commerce and ecommerce continuing their strong growth.

The company expects FMCG growth to revive, leading to a sequential demand improvement driven by improving macroeconomic indicators.

Morgan Stanley's report said a delayed winter hurt the healthcare portfolio and poor performance from beverage portfolio. Moreover, the company's rural continued to outperform urban and GT trends remained subdued.

The brokerage has an 'equal weight' rating with price target of Rs 531, implying 1% upside.

The scrip fell as much as 4.5% to Rs 501.1 apiece, the lowest level since Dec. 23. It pared loss to trade 3.7% lower at Rs 505.75 apiece, as of 10:57 a.m. This compares to a 0.7% decline in the NSE Nifty 50.

It has fallen 6.34% in the last 12 months. Total traded volume so far in the day stood at 0.69 times its 30-day average.