Most brokerages said Dabur India's first-quarter business update points to improving demand trends, with stronger international growth and a recovery in key domestic segments. Citi and Morgan Stanley, however, remained cautious, saying investors should watch whether the recent acceleration in growth can be sustained.
Brokerage reactions followed Dabur's business update for the quarter ended June 30, in which the FMCG maker said it expects consolidated revenue to grow at a double-digit rate, led by resilient domestic demand, sequential recovery in beverages and healthcare, and strong international performance despite geopolitical headwinds. The company also expects stable operating margins and double-digit growth in profit after tax.
Most Brokerages See Recovery Gathering Pace
Nomura said Dabur has returned to double-digit growth and believes the business has begun showing sequential improvement. The brokerage said expectations of a turnaround have increased following the appointment of Chief Executive Officer Herjit Bhalla and retained its Buy rating with a target price of Rs 600.
BofA also struck a constructive tone, saying business recovery continued during the quarter, supported by improving overseas performance. It said the stock's valuation discount compared with peers and its historical trading range already reflects existing concerns, making the risk-reward favourable as business trends improve.
Macquarie maintained its Neutral rating with a target price of Rs 470. It said international operations performed above expectations, while the India business remained broadly in line with estimates. The brokerage expects stable operating margins and double-digit growth in profit after tax.
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Citi, Morgan Stanley Remain Cautious
Citi retained its Sell rating and target price of Rs 425 despite acknowledging that India's FMCG business remained resilient, with Home & Personal Care continuing to lead growth.
The brokerage said healthcare and beverages showed signs of recovery, while international operations rebounded despite geopolitical challenges. However, it said the key question for investors remains whether the current pace of growth can be sustained.
Morgan Stanley also maintained its Underweight rating and target price of Rs 425. It described the first-quarter update as broadly in line with expectations, while noting that business trends have improved.
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Dabur Q1 Update
In its quarterly business update, Dabur said the India FMCG business is expected to post near double-digit growth, with Home & Personal Care likely to grow at a near-teen rate and healthcare showing sequential improvement. The company said its beverages portfolio recovered during the quarter, while international operations are expected to deliver high-teen growth despite headwinds in the Middle East.
Dabur added that calibrated price increases helped offset inflation, particularly in the hair care segment, supporting stable operating margins. It expects profit after tax to grow at a double-digit rate.
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