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Dabur reported a decent print (+10% YoY India revenue, +5% YoY volume growth) with Foods and Beverages managing the show well. While Healthcare performance appears unexciting (lapping a high base), the HPC category did reasonably well. That said, the performance was decent on an overall basis.

Dabur is pursuing growth in (1) Foods and Beverages portfolio with continued portfolio expansion and (2) aggressive plans in HPC portfolio (requires some improvement in market scenario). We note that it is looking at all spaces and adjacencies in the segments it operates. The attempt is to drive growth (as challenger) in multiple sub-categories apart from maintaining dominance in core categories. The focus on (1) product innovation and new launches – target is to maintain the momentum of last two years (~5% contribution), (2) ramping up ecommerce, seed new products and (3) digital spends. We believe increased business complexity is a key risk. The opportunity to invest in its power brands is very large.

We stay longstanding believers in Mohit Malhotra-led reimagining of Dabur. We like the (1) continued thrust on innovation, agility and culture change, (2) utilisation of e-commerce platform to drive new product development (premiumisation), and (3) distribution expansion and increased investment behind power brands to drive growth. Maintain BUY with a DCF-based revised TP Rs670 (prior: Rs650).

Decent growth print:Consolidated sales grew 8% YoY (similar on 3-year CAGR basis as well). EBITDA was down 2% YoY. Net profit was up 1% YoY to Rs4.4bn.

Domestic performance was better with 10% YoY revenue growth (again similar on 3- year CAGR basis). The good domestic performance was driven by (1) continued strong performance in foods and beverages with 3-year CAGR of 20%. Management highlighted that the beverages portfolio crossed Rs1bn of sales and should further double in FY23. Market share of Real fruit juice has increased by 330bps YoY. Drinks and milkshakes have added to the total addressable market expansion and are seeing good traction;

(2) While the Healthcare business declined 21% YoY, lapping high base of covid-led demand, it was up 10.7% on 3-year CAGR basis, (3) the HPC business recovered well (up 16% YoY) and was up 7.7% on 3-year CAGR basis. Within HPC, shampoo and oral care grew (on 3-year CAGR basis) at 14.4% and 11.3%, while hair oils growth segment grew 3.6% (~30bps YoY market share increase).

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