Dabur's global CEO Mohit Malhotra's resignation has put the company's leadership transition and future strategic priorities under the spotlight. Brokerages are assessing how the change could affect the company's execution, even as premiumisation, a recovery in general trade and growth in key categories offer support.
The FMCG company reported an 11.7% year-on-year increase in consolidated net profit to Rs 506 crore for the three months ending September, marginally ahead of the estimate of Rs 498 crore. Revenue also rose 11.7% to Rs 3,563 crore, compared with the estimate of Rs 3,553 crore.
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Dabur Q2 Highlights (Consolidated, YoY)
- Net profit up 11.7% to Rs 506 crore versus Rs 453 crore. (Bloomberg estimate: Rs 498 crore.
- Revenue up 11.7% to Rs 3,563 crore versus Rs 3,191 crore. (Estimate: Rs 3,553 crore.)
- Ebitda up 7.7% to Rs 633 crore versus Rs 588 crore. (Estimate: Rs 640 crore.)
- Ebitda margin at 17.8% versus 18.4%. (Estimate: 18%.)
- To pay an interim dividend of Rs 3.5 per share.
ALSO READ | Dabur Q2 Results: Double-Digit Growth Holds. What's Behind the 12% Profit Jump?
Here's what brokerages are saying after Dabur announced Q2 results
Citi
- Maintained 'Sell'; target price raised to Rs 380 from Rs 375.
- Leadership transition puts future strategic priorities under focus.
- Premiumisation, stronger core brands and a recovery in general trade support growth.
- Sustainability of the earnings recovery remains uncertain despite improving business momentum.
Goldman Sachs
- Maintained 'Neutral'; target price at Rs 485.
- Premium brands are growing four times faster than regular brands, supporting premiumisation.
- Hair care, digestives and beverages remain key growth drivers.
- CEO transition, rising costs and recovery in honey demand remain key monitorables.
HSBC
- Maintained 'Hold'; target price at Rs 426.
- Leadership transition puts the company's future strategic direction under focus.
- General trade recovery, hair care and beverages support domestic growth.
- Disruption in honey demand and rising operating expenses remain key concerns.
Jefferies
- Maintained 'Buy'; target price cut to Rs 535 from Rs 610.
- CEO Mohit Malhotra's resignation puts the upcoming management strategy in focus.
- Rural demand recovery, premiumisation and Project Saksham support medium-term growth.
- Healthcare faces regulatory challenges.
- Cut earnings estimates by 1-4% amid cost pressures.
Macquarie
- Maintained 'Neutral'; target price at Rs 480.
- Premium brands growing four times faster than regular brands support portfolio premiumisation.
- Beverages, digestives and international markets offer growth opportunities.
- Limited volume acceleration, FSSAI-related risks and the CEO transition constrain the outlook.
Morgan Stanley
- Maintained 'Underweight'; target price at Rs 425.
- Global CEO resignation creates uncertainty around leadership and strategic execution.
- India CEO Herjit Bhalla will lead domestic operations, while PD Narang oversees international business.
- Premiumisation and distribution growth offer opportunities, but cost pressures remain a concern.
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