Dabur India Shares Fall After Q3 Update: Dabur India Ltd shares declined by up to 4 percent in early trading on Tuesday, January 6th, following the release of the company's third-quarter (Q3) update. Dabur India reported in its quarterly update that favorable macroeconomic conditions and recent tax reforms are expected to drive demand improvement and revenue acceleration in the coming quarters. Despite this, the stock opened lower.
Strength in Rural Markets
Brokerage firms have maintained their ratings on Dabur India. They indicate that rural areas are showing ber growth and early signs of increased demand compared to urban areas. The company’s b presence and distribution network in rural markets have helped maintain consistent growth in this segment.
Centrum Research’s Target Price ₹625
Centrum Broking has reaffirmed its BUY rating on Dabur India. The brokerage has set a target price of ₹625 for the stock, which represents a potential return of approximately 20 percent from the current price. Dabur India shares closed at ₹521 on Monday. According to the brokerage, the quarterly update was mixed. Key positives include better performance of rural demand and double-digit growth in the Home & Personal Care segment. The company saw gains in market share in the Hair Oil and Oral Care categories, and improvements in international business. Operating profit grew faster than topline growth, leading to improved EBITDA margins.
Negative Aspects of the Q3 Update
The brokerage noted some weaknesses in the quarterly update. Secondary sales in the Chyawanprash portfolio were below expectations. Additionally, the beverage portfolio remained weak. Despite these factors, the brokerage maintains confidence in the stock.
Nomura’s Target Price ₹580
Nomura has also maintained its buy recommendation for Dabur India. The brokerage has assigned a target price of ₹580 to the stock, which is approximately 11 percent higher than the current price. According to Nomura, revenue growth was in line with expectations, but some weaknesses were observed. A lower base year-on-year and quarter-on-quarter, normal winter loading, and the cold weather impacted sales growth.
Dabur India’s Q3 Sales Growth
Brokerages estimate that Dabur’s sales in India grew by 5.3 percent year-on-year in Q3, primarily driven by low-single-digit volume growth. Total sales increased by 6 percent year-on-year on a consolidated basis in the December quarter.
Signs of Improvement in Dabur’s Business
The company reported early signs of improvement in demand during the quarter. Revisions to GST rates and a focus by distributors and retailers on clearing old stock from the channel have improved consumer sentiment in both urban and rural areas. Rural demand outperformed urban demand this quarter.
Growth in Home and Personal Care Business
Under the India business, Dabur expects double-digit growth in the Home and Personal Care business, driven by b growth in the Hair Oil and Oral Care categories. The company stated that a large portion of the portfolio grew faster than category growth, and market share improvements were recorded during the quarter.
