Dabur keeps brokerages mixed on sluggish demand in Q4, needs revenue boost

Dabur’s business update has kept brokerages hopeful of improving demand and accelerating growth.

The FMCG player reported that its topline was weighed down by “sluggish demand” despite a pick-up in rural areas in the fourth quarter. Revenue was also impacted by the delayed winter, but Dabur managed to sustain its market share, according to experts.

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Rural growth in fast-moving consumer goods picked up on the back of price roll-backs in staples, which led to narrowing of rural-urban demand gap. “With a positive outlook for the rabi crop harvest and monsoon forecast to be normal, we expect consumption to pick up in the coming months,” said the FMCG player in an exchange filing.

Emkay Global cut its earnings estimate on consumer staples player after factoring in the muted demand and the management thrust on topline. “Dabur India is likely to post mid-single-digit consolidated revenue growth, with domestic business growth at 5 percent and volume growth at 4 percent,” said the brokerage.

However, Emkay retained its ‘buy’ call, with a target price of Rs 660 apiece, which indicates a 30 percent upside. Emkay Global added that Dabur could see 17 percent earnings CAGR in FY24-26.

According to Nuvama Institutional Equities, the home and personal care (HPC) segment’s revenues shall grow in high-single digits, whereas healthcare revenues shall grow in low single digit due to delayed winters. F&B is likely to grow in low single digits due to high base in Q4FY23.

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However, international brokerage Citi had a negative view on the company and it retained the ‘sell’ call on Dabur and further slashed its target price to Rs 500 from Rs 520 apiece, indicating a 1.2 percent downside.

Citi said it believes that profitability will be missed in the upcoming quarterly show as a result of Dabur’s higher ad spends and inferior mix. For a rerating trigger, Dabur would have to show sustained acceleration in volume or revenue growth. Additionally, profitability would need to recover.

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