Dabur stock price rises on market share gain, Badshah acquisition

Share price of FMCG company Dabur surged 1.5 percent higher as the company reported market share gain across 95 percent of its portfolio in Q2FY23 and also announced an acquisition to expand its food business.

At 10 am, the stock was quoting Rs 541 on the National Stock Exchange, up by 1.6 percent. In 2022 so far, the stock has declined 6.7 percent while the Nifty FMCG index has advanced 16.52 percent.

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The homegrown FMCG major on Wednesday reported a 2.85 percent decline in its consolidated net profit to Rs 490.86 crore for the second quarter ended September 30. However, its revenue from operations rose 6 percent to Rs 2,986.49 crore against Rs 2,817.58 crore in the corresponding quarter of the previous fiscal.

The company also gained market share across 95 percent of its product portfolio. “We reported a 410 bps market share gain in the Juices & Nectars category, while our share of the Digestives category improved 270 bps. Our Chyawanprash market share increased 120 bps and our share of the Shampoo category improved 40 bps. Dabur share of the Hair Oils market increased 20 bps,” CEO Mohit Malhotra said.

In other news, the firm announced the acquisition of a 51 percent stake in Badshah Masala for a cash consideration of Rs 587.5 crore. The acquisition is expected to be completed before March 31, 2023, it said in its press release.

Plus, the company has announced capex plan of Rs 325 crore for its Indore project with proposed capacity addition for Red Toothpaste, one liter juice and portion packs.

According to global brokerage Goldman Sachs, acquisition of the spices brand will significantly boost the company’s kitchen condiments ambitions. It has a Buy call on the stock with a target price of Rs 680 apiece.

Morgan Stanley, on the other hand, has an Equal-weight call with a target price of Rs 537 per share. “Q2 earnings largely in-line. Market share gains and acquisition to expand foods business are big positives,” it said.

Through the Badshah acquisition, Dabur has entered into the Rs 25,000 crore spices and seasoning market in India, domestic brokerage Motilal Oswal noted.

However, a word of caution was sounded by analysts. Key risks for the company is a sharp slowdown in rural demand growth in India and increased competitive intensity in healthcare products, they said.

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