Dabur India: Target Price Raised to Rs 491 by Prabhudas Lilladher

Dabur India Receives Cautiously Optimistic Outlook from Prabhudas Lilladher

Dabur India has provided a cautiously optimistic outlook for its performance, driven by healthy demand in the Health and Personal Care (HPC) and Food and Beverage (F&B) segments. The company's 4Q numbers showed some pressure on sales in the healthcare, foods, and international business development (IBD) segments, while the HPC segment grew sales by 16.8%. However, Dabur's performance continues to be impacted by the drag on one or more of its segments.

The HPC segment's outlook appears to be better, with a growth rate of 16.8% in sales. However, the hair care growth rate seems unsustainable, which is a concern for the company's overall performance. Despite a better outlook for FY27 compared to recent years, Dabur's portfolio does not indicate the scope for sustained double-digit growth.

Rural markets continue to outpace urban markets, with international markets remaining a concern due to the ongoing geopolitical scenario. Prabhudas Lilladher estimates a compound annual growth rate (CAGR) of 10% in sales and 11.2% in earnings per share (EPS) over FY27-28.

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Dabur trades at a price-to-earnings (P/E) ratio of 35.4 times FY28 EPS, which limits the major downside in the stock. However, the analysts do not see a scope of any material acceleration in growth or a reason for re-rating the stock. Therefore, Prabhudas Lilladher retains a Hold rating with a target price of Rs491 (37xFY28 EPS, Rs467 earlier).