Dabur India - Intent To Grow Faster Is Commendable; Fair Valuation Limits Upside: Nirmal Bang

Nirmal Bang Report

Key Points

• Dabur India Ltd. has ambitious growth plans for each segment (including International business; 25% of sales), with significant brand adjacencies and platform adjacencies.

• Particularly interesting for us are the growth plans in the healthcare segment (~24% salience) under the new business head, who joined earlier this year and has had an extremely successful track record for category creation in Himalaya. Growth in this segment is also important for Dabur because it is more profitable than the rest of its portfolio. Management however pointed out that despite the target of doubling sales growth in this segment over five years, there would not be much of a change in its target of high single-digit sales growth for this segment in the next 12-18 months as initiatives towards category development will take time to kick in.

• While we appreciate the intent to grow rapidly in each segment, we are also worried about its entry into several platform as well as brand adjacencies where right to win is unclear.

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