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Centrum Broking
Dabur India (Buy)
Target: ₹613
CMP: ₹522.65
Dabur India’s Q4-FY21 print was mixed bag, reported Consol. revenue/EBITDA/APAT grew at 25.3 per cent/25.6 per cent/25.1 per cent Y-o-Y. The India business surged 28.4 per cent led by solid volume growth of 24.4 per cent, whilst International (28 per cent of sales) grew 21 per cent (CC).
We note outstanding efforts coupled with strong execution led Dabur to makeover in its stellar performance in FY21. Management cited despite challenging market conditions, the call-on-duty delivered best performance through its rural distribution efforts driving its power brand strategy.
Further, ad-spend rose 53.8 per cent reflecting volume growth, yet it aspires to spend about 10 per cent of sales, but margin slips Q4. We remain sanguine on growth prospects driven by Health-care segment given single digit volume and nearly 4-5 per cent price increases.
We reckon superlative efforts with focus on driving penetration for its focus brands could lead to sustained volume growth. Considering strong growth momentum, we cut FY22/FY23 earnings by 4.4 per cent/ 17.7 per cent.
We retain Buy rating with DCF-based revised Target Price of ₹613, implying 48.3x FY23E EPS. Risks to our call include tepid demand conditions, prolonged recovery from Covid (second wave) and irrational competition.
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