Dabur Q1 Results Review - On Par Performance: HDFC Securities

HDFC Securities Institutional Equities

Dabur India Ltd.’s Q1 FY25 results were in line with the preview update. Domestic volume growth, although on an improving trend, was below our estimates of 6%. Rural continues to grow faster than urban areas on the back of company-specific initiatives such as expanding the distribution network, launching affordable price point packs and the increased acceptance of Ayurveda.

Dabur remains optimistic about high single-volume growth with double-digit revenue growth, led by-

1. focus on power brands;

2. distribution expansion drive, and

3. premiumisation.

Management has guided for 50 basis points Ebitda margin improvement to 20% in FY25. We remain sceptical about management guidance (have pencilled only 9% revenue growth in FY25), given our volatile past track record (6/8/7% revenue/ Ebitda and profit after tax compound annual growth rate over the past decade) and will require the support of macro tailwinds such as favorable weather conditions (given high seasonal portfolio) and normal monsoon for driving sustained momentum in rural to deliver DD revenue growth.

We upgrade our target multiple from 45 times to 50 times and maintain Add with target price of 660 (50 times June-26 earnings per share).

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