Accumulate Dabur India; target of Rs 550: Prabhudas Lilladher

Prabhudas Lilladher recommended accumulate rating on Dabur India with a target price of Rs 550 in its research report dated January 29, 2021.

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Prabhudas Lilladher’s research report on Dabur India

We are increasing FY21/22/23 EPS estimates of Dabur India by 5.1%/1.2%/- 0.4% on back of strong growth in Health Supplements, Oral care and OTC segments. Dabur reported stellar volume growth at 18.1% in domestic business as it registered growth across all categories except home care. We believe that the company will be able sustain double digit growth led by 1) Market leadership in underpenetrated categories like Honey and Chawyanprash (60%+), 2) Market share gains in Oral care (2-3x category growth) 3) Strong brand recall in OTC 4) Brand innovations and investment in Power brands, 5) Robust distribution and supply chain and 6) Cost saving initiatives like Project Samruddhi (savings of Rs 1.5bn in FY21/FY22). Input costs are firm and would keep margin expansion under check although Dabur is looking at calibrated price increases to pass on the impact.

Outlook

We estimate 14.5% PAT CAGR over FY21-23. We value the stock at 42x FY23EPS (earlier Rs 537, 41xFY23E) to arrive at target price of Rs550. Retain Accumulate.

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