Buy Dabur Ltd For Target Rs.675 By Motilal Oswal Financial Services Ltd
Low-single-digit revenue growth; flat operating profit growth
DABUR released its pre-quarterly update for 3QFY25. Here are the key highlights:
Consumption
* FMCG consumption in rural markets was resilient and continued to grow faster than that in urban markets during the quarter.
* General trade was still under pressure, while alternative channels like modern trade, e-commerce, and quick commerce continued to deliver strong growth.
India business
* HPC is expected to grow in mid to high single digits in 3QFY25E, while Health Care is expected to be flat due to the delayed onset of winter.
* Beverages portfolio is expected to report a muted performance.
* Dabur culinary business under the brands ‘Hommade’ and ‘Badshah’ continued to perform well and is expected to post strong double-digit growth.
International business
* The international business is expected to register double-digit growth in CC terms, led by good momentum in MENA, Egypt, Bangladesh and the US.
Consolidated
* The management expects consolidated revenue to grow in low single digits (est. ~3% YoY in 3QFY25; -6% YoY in 2QFY25 and 7% in 3QFY24).
* Inflationary pressure was witnessed in some segments, which was partially mitigated through tactical price increases and cost-efficiency initiatives.
* The management expects flat growth in operating profit.
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