Business

Buy Dabur India; target of Rs 609: YES Securities

kem haris 3 years ago 2 min read

While volume growth has regularized in last two diggings with 2 each given a high base, 2 ‐ yr profit CAGR of16/12 in Q4FY22/ FY22 indicates Dabur’s portfolio strength and share earnings. Flexible growth of 7 in healthcare and strong performance from Foods business on a high base were crucial cons. Its Transnational business continues to grow in double ‐ integers except Turkey which is soft. Crucial negatives were order decline in toothpaste and hair canvas driving muted growth, yet company was suitable to gain request share by 20bps/ 70bps in Q4. Its brands in healthcare, authorities and home care continue with a strong growth instigation. Indeed on the periphery front, despite the unknown commodity affectation, the company was suitable to maintain perimeters with aggressive price hikes in all parts other than hair canvas and strong cost controls. Expansion of nontransferable request is a crucial focus area for the company in parts like single sauces, potables and healthcare. We anticipate the company to continue delivering assiduity — leading growth for the coming couple of times led by aggressive NPD, distribution expansion and brand extensions. Given the nature of portfolio, pricing power remains strong which should help the company keep spending on A&P despite affectation pressure. While periphery pressures make us trim our earnings estimates, Dabur’s increased growth aggression, metamorphosis enterprise, strong pastoral reach expansion strategy amidst an expanding Ayurveda/ herbal request and perfecting Transnational growth outlook, we maintain BUY, as valuations also look reasonable now post the recent correction.

Outlook

We make in profit/ EBITDA/ PAT growth of12/13/14 over FY22 ‐ 24E. We trim our EPS estimates by6 to incorporate periphery headwinds and slightly lower profit growth hypotheticals due to pastoral retardation and order headwinds in hair canvas But given seductive valuations and possibilities of inorganic growth, we maintain BUY on the stock with a revised PT of Rs609 grounded on 45x FY24E earnings, in ‐ line with its 5 ‐ yr average multiple.