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Yes Securities Report
Dabur India Ltd. Q2 FY24 performance was largely in-line with expectation. Even after taking a hit from ‘Namaste's' legal cost regarding litigation, it has delivered 20.6% Ebitda margin.
In H2 FY24, management is targeting to deliver high single-digit to low double-digit growth.
On margins, Dabur is now aiming to deliver slightly better than the earlier FY24 target of 19.5%.
In terms of the lawsuit on one of Dabur's step-down subsidiary - Namaste, the management has assured that legal cost will be minimal (it was Rs 360 million in Q1, expected to be Rs 200 million in Q2 and lower amount quarter after quarter), revenue impact is also low as portfolio contributes less than 1% of revenues (U.S. relaxer revenues contributes even lower) and also continues to believe that there is no merit to the claims. It will remain an overhang as litigations are usually long drawn.
There is valuation comfort post recent correction, this along with visibility of better earnings going forward makes us upgrade the stock to 'Buy' from 'Add' earlier with a revised target price of Rs 640.
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