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Dabur’s 1QFY27 results were broadly in line with estimates, on the revenue/EBITDA fronts, while PAT beat estimates. Revenue grew in doubledigits for a second consecutive quarter, led by 5% domestic volume growth (lower sequentially from 6% in 4Q). Gross margin was up by 30bps while EBITDA margin expanded by 10bps yoy due to higher A&P spends. Growth was led by Home care, up ~12% yoy (high-teens growth in hair oil) followed by ~7% growth in Foods & Beverages (F&B) and 5.5% in Healthcare. Beverages benefitted from a strong summer in May-Jun, post-Apr which was hit by unseasonal rains. We believe International business reported strong growth of ~16% on the back of rupee depreciation. We marginally adjust our estimates and now expect sales/earnings CAGR of ~9/10% over FY26-29E. Weaker than expected monsoons will impact rural demand and pose a downside risk to earnings, given Dabur’s relative higher share of rural. But the stock is attractive at current valuation and has limited downside, in our view. Hence, we maintain ADD and TP of Rs470 (35x Jun-28E EPS)

1QFY27 result summary

Revenue grew ~11% yoy on a low base of 2% in 1QFY26 (in line with consensus). Volume growth was healthy at a high single digit, albeit on a low base. Gross margin expanded by 30bps yoy (down by 100bps qoq) to ~47.3% aided by better mix, pricing actions, and cost controls. EBITDA margin expanded by 10bps yoy to ~19.7% on account of higher A&P spends (+14% yoy). Adj PAT grew 15% yoy and was 5-6% ahead of our and consensus estimates, led by higher other income and lower effective tax rate.

Earnings call KTAs

1) The Beverage portfolio staged a strong recovery after a weak April impacted by unseasonal rains, with mid-to-high teens growth in May-June driven by Glucose and Juices.

2) Hair Oil grew 18% led by 8% volume growth, with all brands faring well; expects double-digit growth over next few quarters as well.

3) Oral care reported high single-digit growth; Herbal segment outperformed non-herbal by 550bps, and Dabur outperformed the overall toothpaste category.

4) Badshah reported 13% yoy growth led by 11% volume growth. It reached exit rate of Rs4bn from Rs2.2bn at the time of acquisition, with international growing 40% and Ecom >100%. Margin too is on an improving trend. Badshah expanded beyond Gujarat/Maharashtra into MP, Rajasthan, and Delhi NCR.

5) It targets M&A in the D2C space over next 3Y.

6) Rural demand continued to outperform Urban.

7) Inflation is a tad concerning, but Dabur expects to navigate the season.

8) It expects double-digit consol revenue growth for full FY27 and margins to be better than in FY26.

9) Capital allocation: focus on M&A; dividend payout already increased to 100% of India profits; Rs5bn for Dabur Ventures; capex/routine expenses (Tamil Nadu plant under construction with planned outlay of Rs4bn).

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