ICICI Securities

Dabur (Add)

Target: ₹700

CMP: ₹588.50

We are longstanding believers in Mohit Malhotra-led reimagining of Dabur. We had observed the willingness to take risks (read new launches) in the last two years. All said, 1Q surprised us positively on the magnitude of execution. It reported a strong print with 2-year revenue CAGR of 8 per cent and domestic volume growth (2-year CAGR) of 10 per cent. Importantly, it achieved outperformance across the portfolio. The report card states that it does not matter whether Dabur is a leader or a challenger in a category, its gaining share in most of them. To add to it, the continued momentum in healthcare and expanded opportunity in foods (beverages) are aiding a strong print. However, we believe (1) slowdown risk in the healthcare portfolio still exists and (2) sustaining growth momentum in the beverages portfolio may be difficult. We like the (1) continued thrust on innovation, agility and culture change driven by Mohit, (2) utilising e-commerce platform to drive new product development (premiumisation), (3) distribution expansion and increased investment behind power brands to drive growth. Further, turnaround in International business and Foods business (now with presence in larger drinks category) with recovery in HPC portfolio can be a key growth driver.

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