Analysts Positive On Dabur, Buoyed By Growth In Rural Demand

Dabur India Ltd.’s management is upbeat about the company’s growth as it listed at a recent analyst meeting increasing rural demand and the fiscal stimulus as driving factors.

Some of the strategies the company said it has adopted are:

• Accelerated pace of product launches.
• Intense direct distribution expansion.
• Increased targeted advertising spends based on localised marketing.

Shares of the fast-moving consumer goods major have risen 40.6 percent year-to-date compared with a 13.5 percent increase in the S&P BSE Sensex.

Here’s what analysts have to say about Dabur’s stock performance:

Deutsche Bank:

• Retain ‘Buy’, price target Rs 525—an upside potential of Rs 46.
• Company to gain from better execution, market-share gains and improving macro-economic environment
• Competitor Patanjali, earlier seen as disruptive, has only been a distraction.
• Company has made smart and practical launches in fruit drinks segment and FMCG products such as brahmi amla hair oil and red gel toothpaste.
• Company’s international business to accelerate (28 percent of revenues).
• Relative valuations attractive after underperformance over last few years.

Citi:

• Retain ‘Buy’, price target of Rs 495 an upside potential of Rs 10.
• Management confident of accelerated growth.
• Sharpening regionalised focus to improve consumer reach.
• Company is tailoring product mix specific to geographies.
• Company has identified 15 brands where it sees growth opportunities.
• Company is diving frontline sales teams for better portfolio selling.