We reiterate ?overweight? rating on Dabur India with a target price of Rs 190 per share. Strong comments from management after results are likely to drive the stock higher. There are multiple pillars of growth across categories such as home care, baby care, skin care and OTC products, which are currently sub-scale but offer solid visibility for long-term growth of the company.
Dabur reported consolidated revenue, ebitda and adjusted PAT growth of 17%, 14% and 15% versus MSe of 16%, 25% and 19%, respectively. Domestic business posted revenue, operating profit and PAT growth of 13%, 15% and 16%, respectively. Strong comments from management post results are likely to drive the stock higher, in our view.
Strong volume growth outlook for the domestic FMCG business at 10-12% for FY15 premised on urban growth picking up, and management is currently investing in creating urban infrastructure to cater to such growth. Even if urban growth does not pick up, management expects 8-10% volume growth.
Morgan Stanley
