3 Bonus, 1:10 Split, 275% Payout: FMCG Stock At Rs 500, Hot To Buy; Next Key Trigger Q4, Dividend Rewards

FMCG giant in the personal care segment, Dabur India which is trading a little over Rs 500 levels, is a technical and fundamental (techno-funda) pick for hedging value returns ahead. Holding well-established brands in both Ayurvedic and Herbal segments, Dabur shares have seen healthy traction over the last three months. The stock is expected to move upward ahead, with key triggers being Q4 results and final dividend rewards for FY24 that are scheduled in the first week of May.

Last week, on Friday, Dabur India shares ended at Rs 504.35 apiece, broadly flat but in the green zone with a market cap of Rs 89,372.80 crore. The stock is nearing its 52-week high of Rs 596.90 apiece while trading considerably up from its 52-week low of Rs 489 apiece.

Dabur's price-to-equity ratio is at 61.21x, while its earnings per share is at Rs 2.42. It has a 10% upper circuit and lower circuit limit of Rs 554.75 and Rs 453.95 apiece respectively, as per BSE data.

In its regulatory filing, Dabur India has said that the meeting of the Board of Directors of the Company is scheduled on May 2, 2024, inter alia, to consider and approve the audited financial results of the Company for the quarter/financial year ended on 31st March 2024 and to consider recommendation of final dividend, if any, for the financial year ended on 31st March 2024.

For FY24, earlier, Dabur paid dividends up to 275% valuing Rs 2.75 per share. In the previous financial year, the stock delivered a whopping 520% dividends worth Rs 5.2 per share. As per Trendlyne data, Dabur has paid up to 48 dividends since May 2001.

On the current market price, Dabur's dividend yield is up by 1.03%.

Among other corporate affairs, Dabur has split its shares only once to the tune of a 1:10 ratio in December 2000. The face value of Rs 10 each was reduced to Rs 1 each.

But apart from dividends, Dabur has a healthy record of bonus shares. Although, it has paid no bonus shares in at least 14 years as of now. The last bonus issue was of 1:1 in September 2010, while it distributed bonus shares of 1:2 in January 2007, and a 1:1 issue in January 2006.

Technical Outlook On Dabur India:

Adding Dabur India to its techno-funda picks, brokera ge Ashika Group said, "The stock has seen a healthy retracement in the last three months It is currently seen rebounding after a base at the 2022 low. The share price of Dabur has been consolidated after taking support at 38.2% retracement (currently placed at 495) which also coincides with a multiyear low, signalling resumption of up move and fresh entry opportunity."

In this process, Ashika's note said, that if the stock can sustain above the crucial level of 490-490 then it might result in a classical bullish 'Double Bottom' formation. Among the oscillators the weekly RSI is witnessing signs of divergence indicating of limited downside hereon thus validating positive bias. Volume too had been supportive indicating accumulation at current levels.

Going ahead, Ashika said, "One can expect the stock to resume its upmove and head higher towards 580 levels in the coming month being the 23.8%
retracement of the entire rally since 2016."

Hence, the target price is set at Rs 580 on Dabur currently.

Fundamental Outlook On Dabur:

Dabur's fundamentals are strong too! Ashika highlighted four key pointers:

1. Dabur is one of the leading companies in the domestic FMCG space with well-established brands in the ayurvedic and herbal category. It has a strong distribution network and has a diversified product portfolio. The
company offers a wide range of world-class Ayurveda and nature-based products across diverse categories
such as Health Care (38.8% of sales), Home & Personal Care (46% of sales), and Food & Beverages (15% of sales) as of Q3FY24.

2. Dabur continuously seeks synergistic acquisitions in domestic and international markets to increase its market share and brand portfolio. During the 4QFY24 business update, Dabur India reported decent performance. Though overall demand remained sluggish, rural India witnessed a pick up in growth amid price rollbacks in staples which led to the gap between rural and urban narrowing. With a positive outlook for the rabi crop harvest and monsoon forecast to be normal, the consumption is expected to pick up in the coming months.

3. Dabur's consolidated revenue is expected to register mid-single-digit growth during Q4 FY24. The inorganic
revenue growth which was to the extent of around 2.3% till YTD'Dec2023 on account of the Badshah acquisition is
now factored in the base. Badshah Masala continued to perform well and is expected to post strong volume-led
growth in the high teens in coming quarters.

4. International business during 4QFY24 is expected to register double-digit growth in constant currency terms, led by good momentum in the MENA region, Egypt & Turkey. Margins are likely to witness expansion on account of deflation in input cost and cost-saving initiatives during 4QFY24.

Disclaimer:

The recommendations made above are by market analysts and are not advised by either the author or Greynium Information Technologies. The author, the brokerage firm nor Greynium would be liable for any losses caused as a result of decisions based on this write-up. Goodreturns.in advises users to consult with certified experts before making any investment decision.