Dabur India Q1 Review: Management's Growth Assurance Sparks Target Price Hikes
UBS Global Research and Jefferies raised the target price. Morgan Stanley kept the target prices unchanged. All these brokerages retained their respective stock rating on Dabur India.
Most analysts hiked the target price of Dabur India Ltd. as the management gave assurance of growth recovery moving forward. The company will focus on mergers and acquisitions in the health and wellness category moving forward.
Management is expecting a high single-digit growth in the ongoing financial year 2026. They are also aiming to reduce the impact of higher raw material prices by raising product prices and making cost-optimising moves, analysts quoted management in their notes.
UBS Global Research and Jefferies raised the target price. Morgan Stanley kept the target prices unchanged. All these brokerages retained their respective stock ratings on Dabur India.
The chyawanprash producer saw its domestic volumes decline because the moonset started early. Its volume declined 1% on the year. Its gross margin contracted 75 basis points on the year to 47% due to inflation in raw materials. Margins got some support from price hikes, UBS Global Research said.
The brokerage has a 'Sell' rating on the stock and raised the target price to Rs 500 apiece from Rs 470 apiece. The current target price implied 5.5% downside from Thursday's closing price.
The home and personal care segment of Dabur India delivered a 5.5% year-on-year growth in the first quarter, as double-digit growth in homecare supported it, UBS Global Research said.
Dabur India Q1 Earnings Key Highlights (Consolidated, YoY)
Net Profit rose 2.8% to Rs 514 crore versus Rs 500 crore
Revenue rose 1.7% to Rs 3,405 crore versus Rs 3,349 crore
Ebitda rose 2% to Rs 668 crore versus Rs 655 crore
Margin at 19.6% versus 19.55%
Urban markets witnessed a marginal recovery during April–June, which will likely continue, management said, as Jefferies cited in the note. Improving macroeconomic conditions, tax cuts, and a decline in food inflation will support the demand recovery in urban areas. Meanwhile, rural demand continued to outgrow urban areas.
Jefferies has a Buy rating on the stock. The brokerage hiked the target price to Rs 610 from Rs 590 apiece, which implied 15.3% upside from Thursday's close.
Lower spending on advertisement largely contributed to the margin beat, Morgan Stanley said in a report. The management invested more in the below-the-line category, with a focus on oral and hair care because of the competitive intensity.
Morgan Stanley sees most categories of Dabur India growing at double-digit rates, while the beverages may see low single-digit growth as rain continues to weigh on demand for summer drinks in July.
The brokerage has an underweight rating with a target price of Rs 396 apiece, which implies a 25.2% downside from Thursday's close price.
