Business

Dabur India Rating: Buy- Multiple positive levers are in place

We consider Dabur is nicely positioned to capitalise on customers’ rising choice for natural & pure merchandise and e-commerce.

Among our prime ‘BUY’ suggestions, Dabur delivered a 16.1% return in CY20 (23.6% from 1 Apr’20). In CY21 too, Dabur would stay a robust quantity progress story contemplating: (i) addition of latest customers to Health portfolio within the wake of the pandemic; (ii) worst is behind for Fruit Juices and different segments impacted by the lockdown; and (iii) a powerful innovation funnel (PET bottle juices, well being drops, well being juices, Amla-plus juices, pickles and apple cider vinegar are doing nicely). Given the positive structural levers coming in place for the corporate, we revise up our goal a number of to 55x (from 50x) and arrive at a revised TP of Rs 665. Maintain Buy.

New CEO’s deal with market share seen
We proceed to understand new CEO Mohit Malhotra’s deal with: (i) gaining market share fairly than increasing margins as the highest precedence; and (ii) strengthening Dabur’s fairness as India’s premier Ayurveda client firm. Dabur has logged share enlargement throughout many segments: toothpaste (37bps), hair oils (44bps), Chyawanprash (325bps), juices & nectars (324bps), glucose (94bps), shampoo (43bps), digestive tablets (288bps) and bleaches (125bps). We anticipate advantages from market share enchancment to help profitability over the long term.

Healthcare would proceed to do nicely however Q2 unlikely to recur
Higher deal with well being amongst customers within the wake of the pandemic lifted Chyawanprash’s penetration from 2% to ~4%. In well being dietary supplements, penetration is about 10% in India in contrast with 80% in developed nations. Dabur is engaged on LUP format packaging for Chyawanprash at lower cost factors. Honey’s penetration in India stays low at ~25%. More gamers would develop the general market, and we don’t anticipate any long-term impression on Dabur resulting from entry of latest gamers in Chyawanprash or honey. Ethicals reaches about 100,000 ayurvedic chemist retailers whereas OTC reaches about 275,000 chemist retailers (up from 245,000 retailers).

Outlook and valuation: Positive
We consider Dabur is nicely positioned to capitalise on customers’ rising choice for natural & pure merchandise and e-commerce. Dabur’s e-commerce enterprise surged over 200% y-o-y in Q2FY21 and now makes up 6% versus 2.1% a 12 months in the past; it launched e-commerce-specific merchandise similar to Dabur Himalayan Apple Cider Vinegar and Dabur Cold Pressed Mustard. Dabur can also be a robust rural play (45% income share).

Considering the a number of structurally positive levers coming in place, we revise up our goal a number of to 55x (from 50x) and preserve ‘BUY/SO’. The inventory is buying and selling at 46.1x FY22e EPS.

Get reside Stock Prices from BSE, NSE, US Market and newest NAV, portfolio of Mutual Funds, Check out newest IPO News, Best Performing IPOs, calculate your tax by Income Tax Calculator, know market’s Top Gainers, Top Losers & Best Equity Funds. Like us on Facebook and comply with us on Twitter.

Financial Express is now on Telegram. Click here to join our channel and keep up to date with the most recent Biz information and updates.



Source link

Related Articles

Leave a Reply

Your email address will not be published. Required fields are marked *

Back to top button