Dabur India (DIL) is one of the biggest FMCG companies with a presence in Ayurveda based products across categories. The company has substantial market share in health supplement, OTC & Ethical products, oral care, hair care, home care & juices.
Dabur reported 9.9% India sales growth led by 5% volume uptick.
Dabur’s share price has given 89% return in the last five years (from Rs 303 in August 2017 to 574 in August 2022).
We value the stock at Rs 700 on ascribing 55x FY24 earnings multiple
We also like TCPL in our FMCG coverage.
|Key Financials||FY20||FY21||FY22||5 Year CAGR % (FY17-22)||FY23E||FY24E||(Blank)||CAGR % (FY22-24E)|
|EBITDA Margin %||20.6||20.9||20.7||-||19.9||20.8||-||-|
Q1FY23 Results: Splendid growth in beverages; newly forayed fruit drinks poised to reach Rs 200 crore sales in FY23
Dabur has been continuing the strategy of growing through new product launches, innovations & foraying in newer categories. Though growth in health supplement business (Covid tailwind) has tapered down in last few quarters, the jump in beverage category has more than compensated the dip in health supplement sales. Given, the major part of the company’s raw material is herbs & agri products, margin impact on Dabur is least among FMCG companies. We believe the company would be able to leverage its brands Dabur, Real & Vatika by foraying in different categories. This would pave the way for growth in longer run and offset the impact of low growth in saturated categories like hair oils. We also believe Dabur has the ability to improve its operating margins going forward given dependency on imported raw material is least among FMCG companies. We remain positive on Dabur India. We maintain our BUY recommendation on the stock with a revised target price of Rs 700 / share (earlier Rs 680)
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