Dabur share price: Sharekhan pegs target at Rs 675 - 20% potential upside
Sharekhan says that Dabur India consistently registered strong double-digit volume growth of 17%-18% in Q2FY2021 and Q3FY2021. Strong volume growth can be attributed to robust demand for healthcare and ethical products and market share gains in categories such as oral care, shampoos, Chyawanprash, and honey. Sharekhan says it has maintained a Buy recommendation on Dabur India with a revised price target of Rs 675
Sharekhan says that Dabur India consistently registered strong double-digit volume growth of 17%-18% in Q2FY2021 and Q3FY2021. Strong volume growth can be attributed to robust demand for healthcare and ethical products and market share gains in categories such as oral care, shampoos, Chyawanprash, and honey. Sharekhan says it has maintained a Buy recommendation on Dabur India with a revised price target of Rs 675. Dabur India share price today is Rs 558, down Rs 8 or 1.4%. Dabur share price has moved down from Rs 574 to Rs 558 in the last 1 week.
Sharekhan expects Dabur to register 30%+ volume in Q4FY2021 on account of sustained double-digit growth in healthcare and shampoos, improved sales in hair oils due to recovery in the hair oil category, gaining market share in key categories, and supported by low base of Q4FY2020. The recent surge in COVID-19 cases has again pushed demand for sanitizers and hygiene products, while demand for healthcare products continues to remain strong.
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Sharekhan interaction with most medical/chemist shops suggest that demand for products such as giloy, tulsi drops, and honey has gone up significantly in recent times. Dabur India is also promoting Dabur Sanitize Germ Protection soap, which was tested in a few cities in Q3. Demand for such products is expected to remain strong in the domestic market.
Sharekhan avers that rural India is yet to see any underperformance and demand environment in rural markets has been keenly monitored in the coming months. Health supplements and OTC products, which registered growth of 49% and 31%, respectively, in 9MFY2021 will continue to deliver strong double-digit growth in the coming quarters (including Q4). Sustained market share gains and higher promotional activities will help the oral care and shampoo category to achieve strong growth. The hair oil category has consistently recovered on a q-o-q basis; and Sharekhan says it expects strong rebound in Q4. Going ahead, new product addition, improving penetration of healthcare products (including Chyawanprash and honey), sustained market share gains in large categories, and enhanced distribution will help Dabur India to achieve a revenue CAGR of 14.5% over FY2020-FY2023, added Sharekhan.
Sharekhan expects Dabur India operating margins to gradually improve from 20.6% in FY2020 to 22.5% in FY2023 because of efficiencies, cost-saving programmes, and better revenue mix. Sharekhan report said that it expects Dabur’s earnings to report a 17.6% CAGR over FY2020-FY2023 (much better than a 6% earning CAGR achieved over FY2017-FY2020). Another year of normal monsoon and sustained strong demand in rural India will act as an additional trigger for earnings uptick in the near term.
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