IGI Logo

IGNITE to drive growth, M&A a key rerating trigger

Dabur has outlined a growth acceleration strategy under ‘Ignite’, with focus on

1) stepping up A&P by 150-200bps in core brands (60% of business)

2) Increase share of premium products (17% to 20% in 18 months) which is margin and growth accretive

3) strengthening execution through Project Saksham and operating efficiencies

4) funding growth through increase in savings from Rs1.15bn to Rs2bn

5) higher M&A for strategic acquisitions, although no timeline for acceleration.

Dabur reiterated its full-year double-digit revenue growth guidance, supported by sustained momentum across core brands, OTC & digestives, foods and premium beverages, alongside improving GT traction and strong growth in alternate channels.

We estimate a Sales and EPS CAGR of 10% and 11.9%, respectively, over FY27–29. We value Dabur at 32x Sep’28 EPS, arriving at a TP of Rs450 (earlier Rs476 at 35x Jun’28 EPS). While valuations at 25x FY29E EPS limit downside, management’s delivery on M&A (particularly value-accretive D2C acquisitions) and improved growth in core business would be key to stock re-rating. Upgrade to Accumulate

Financial Highlight

India volume up by 5.5% YoY:

Revenues grew by 11.6% YoY to Rs35.6bn (PLe: Rs35.42bn). Gross margins contracted by 59bps YoY to 48.8% (Ple: 48.0%). EBITDA grew by 7.5% YoY to Rs6.3bn (PLe: Rs 6.45bn); Margins contracted by 68bps YoY to 17.7% (PLe:18.2%). Adj PAT grew by 12.1% YoY to Rs5bn (PLe:Rs4.95bn). The company declared an interim dividend of Rs 3.50/share.

Consumer care revenues grew 11.4% YoY while EBIT grew by 10.7%. Margins contracted by 14bps YoY to 22.3%. Food segment revenues grew by 14.1% YoY while EBIT grew by 12.8%. Margins contracted by 14bps YoY to 12%. Retail segment revenues grew by 7.2% YoY while EBIT declined by 31.1%. Margins improved by 386bps YoY to 7%.

* Dabur’s HPC business delivered (10.9%) broad-based growth, led by strong double-digit growth in Hair Oils, Shampoos and Home Care. Within Home Care, Odonil led the performance. While Odooms and Sani fresh also recorded healthy growth, new launches of Odonil Car Fresheners and automatic diffusers gained traction.

* Skin care grew at high single digits, driven by strong performance in the Oxy franchise. The recently launched Oxylife Detan also received positive consumer feedback.

* Oral Care reported mid-single-digit growth, with the Herbal range continuing to deliver robust performance.

* Healthcare business grew by 6.9%. The growth was supported by strong double-digit performance in Digestives and OTC & Ethicals, partly offset by continued weakness in Health Supplements.

* Dabur Honey witnessed a decline, impacted by temporary trade disruption following the FSSAI labelling order.

* F&B business reported strong growth of 17.4%, driven by Foods, while the Beverages portfolio witnessed a sequential recovery, delivering mid-teen growth.

* International business reported 20% growth led by 21.2% growth in Namaste, 13.7% in MENA, 42.4% Turkey, -33.3% in UK, 31.4% in Bangladesh, 21.4% in Nigeria, 30.4% in Egypt and 43.2% in SSA Region in INR terms respectively.

Please refer disclaimer at Report
SEBI Registration number is INH000000933