Published on 11/06/2019 2:02:55 PM | Source: HDFC Securities Ltd

Pick of the Week: Dabur India Ltd - HDFC Securities

Posted in Broking Firm Views - Short Term Report| #Dabur India Ltd #FMCG #HDFC Securities #Trading Report

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Pick of the Week: Dabur India Ltd - HDFC Securities


Company profile:

Dabur India Limited is one of India's leading FMCG Companies. Building on a legacy of quality and experience for 135 years, Dabur, today, is India's most trusted name and one of the world's largest Ayurvedic & Natural Health Care Company.

It has presence across Hair Care, Oral Care, Health Care, Skin Care, Home Care and Foods segments. Dabur India's FMCG portfolio today includes five flagship brands with distinct brand identities - Dabur as the master brand for natural healthcare products, Vatika for premium personal care, Hajmola for digestives, Real for fruit-based beverages, and Fern for fairness bleaches & skin care.

Dabur's products also have a huge presence in the overseas markets and today they are available in over 120 countries across the globe. Its brands are highly popular in the Middle East, SAARC countries, Africa, US, Europe and Russia. Dabur's overseas revenue today accounts for over 27.4% of the total turnover.


Investment Rationale:

* Diversified product portfolio and Strong Distribution Network

* Ayurveda-based products have been gaining traction

* Out of the dark clouds

* Brand building initiatives

* Huge Growth opportunities in Indian FMCG market


View and Valuation:

We like Dabur India because of its diversified product portfolio, strong distribution network, traction in ayurveda-based products, Brand building initiatives by new top management. Long term outlook for the industry will always remain bullish. Growing incomes, favourable demographics, easier access and changing lifestyles will be key growth drivers. Currently, Stock is trading at 39.6x FY20E and 33x FY21E earnings. We have estimated 13% CAGR in revenue and 22% CAGR in net profit over FY19-21E, while margin will expand 230 bps over same period. Dabur has corrected recently with the market and now it is trading at its almost 2 years average valuations. We think this is an opportunity for entering in the stock for sustainable long term returns. We recommend Dabur a BUY at CMP of Rs. 404 and add on dips of Rs. 380 for the target price of Rs. 475 over next 4 quarters. 


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HDFC Securities Limited (HSL) is a SEBI Registered Research Analyst having registration no. INH000002475


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