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Strategy remains intact, aiming for better outcome

* At Dabur’s analyst meet, newly appointed CEO Mr. Herjit S. Bhalla outlined “IGNITE” as the roadmap for the second half of Vision VII (FY25- 28). The emphasis was on sharper execution of existing initiatives rather than new announcements, and a refreshed strategy is expected in six months. Dabur has 27 brands with turnover above INR1b, seven categoryleading brands contributing ~50% of revenue, reach across ~8.5mn outlets and penetration in eight out of 10 Indian households.

* The first half of Vision VII has largely been about strengthening the base. Dabur exited six non-core brands, rationalized 350+ SKUs and consolidated its distributor network by 43% under Project Saksham, shifting from category-wise distributors to a unified model without exiting any geography. These changes have doubled distributor throughput and are now driving a recovery in General Trade. Cost programs delivered INR1.15b of savings over 18 months, while the premium portfolio has scaled up to ~20% of revenue. With the base in place, the focus now shifts to brand investment, which was held back over the past year by inputcost inflation.

* IGNITE builds on this through four levers. The core will be energized with a 150bp step-up in A&P. High-growth platforms in OTC & digestives, skin care, home care and foods will be scaled. The quality of urban and rural reach will be improved. Premium contribution is targeted to rise to 23% by FY28. Efficiency programs will fund the reinvestment, with savings in the second half of the Vision targeted at 1.5x the first half. M&A will stay within existing or closely adjacent categories, complemented by minority stakes in D2C brands through Dabur Ventures.

* Dabur’s 2QFY27 consolidated revenue grew 12% YoY to INR35.6b (in line), led by 10.7% growth in India business and 20% growth in International. India volume growth stood at 5.5% (below est.). Home & Personal Care grew 11% YoY, Healthcare grew 6.9%, and Food & Beverages grew 17.4% YoY. GM contracted 60bp YoY to 48.8%. EBITDA margin declined 70bp YoY to 17.7%, with EBITDA growing 8% to INR6.3b (both in line). We expect margins to recover gradually through calibrated pricing, premiumization and productivity gains, and we build in EBITDA growth of 11% for FY27E and 14% for FY28E.

* After delivering muted sales growth over the past two years (1.3% in FY25 and 5% in FY26), Dabur expects to return to double-digit consolidated revenue growth in FY27. We see the shift toward volume-led growth, funded by internal savings and reinvested behind brands, as the right direction. Moreover, the early signs of GT recovery, premium mix and volume recovery are encouraging. However, the sustainability of demand momentum and commodity inflation remain key monitorables in FY27. The strategy refresh in six months should provide better visibility on the next leg of growth. We reiterate our Neutral rating on the stock with a TP of INR425 (30x Sep’28E EPS).

2QFY27: In-line quarter, volume growth at 5.5%

* DABUR 2QFY27 consolidated revenue grew 12% YoY (in line) to INR35.6b, while India business revenue grew 10.7% YoY. India volume growth stood at 5.5% (est. 8%). International business delivered 20% growth in INR terms, supported by broad-based performance across key markets. General Trade witnessed a resurgence, growing at mid-to-high single digits. Dabur indicated that its premium brands continued to outpace the rest of the portfolio, growing at 4x their pace.

* Home & Personal Care maintained strong performance, expanding 11% YoY. The segment was supported by high-teen growth in hair care (hair oils and shampoos) and double-digit growth in home care. Healthcare grew 6.9% YoY, with double-digit growth in Digestives and mid-teen growth in OTC & Ethicals, partly offset by weakness in Honey (mid-single-digit decline) amid a high base and temporary trade disruption (FSSAI labeling issue). F&B delivered strong growth of 17.4%, supported by improving beverages momentum and broadbased double-digit growth across the Foods portfolio.

* GM contracted 60bp YoY to 48.8% (in line), although it expanded 150bp QoQ. EBITDA margin declined 70bp YoY to 17.7% (in line), while EBITDA grew 8% to INR6.3bn (in line). Management expects operating margins to improve gradually through calibrated pricing actions, premiumization and productivity initiatives while mitigating commodity inflation. We build EBITDA growth of 11% for FY27 and 14% for FY28E.

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