This Bluechip FMCG Stock Reports Strong Pat At 50% QoQ Hike, Buy At Rs. 670 Target Price: ICICI Securities

Reputed brokerage firm ICICI Securities suggests investors buying the stocks of Dabur India Ltd. The company reported a consolidated profit after tax (PAT) in Q1FY23 at Rs. 441 crore, gained marginally by 0.6% YoY. However, on a sequential basis, its PAT increased by 50% in Q1, as PAT was reported at Rs. 294 crore in Q4FY2.

Stock To Buy: Target Price & Financial Result

The Current Market Price (CMP) of Dabur is Rs. 574. ICICI Securities has estimated a Target Price for the stock at Rs. 670. This stock has the potential to give a 17.74% return, in the upcoming 1 year. This is a large-cap stock with a market capitalization of around Rs. 102,609 crore.

Stock Outlook
Current Market Price (CMP)	Rs. 574
Target Price	Rs. 670
Potential 1 year return	16.74%
52 week high share price	Rs. 658.95
52 week low share price	Rs. 482.25

Dabur reported a decent print, with an above 10% YoY India revenue, and above 5% YoY volume growth, its foods and beverages segment is also managing the show well. Strong double-digit growth in food and other businesses has also been reported. The company's food business increased by 69% QoQ; its other and retail business revenues increased by 37% and 15% respectively. According to an available report from the company, its growth in revenue was mostly driven by a huge 180% YoY gain in its retail business.

ICICI Securities: Advantages Of The Stock

Commenting on the advantages of buying the stock, ICICI Securities mentioned, "Dabur is pursuing growth in Foods and Beverages portfolio with continued portfolio expansion and aggressive plans in HPC portfolio (requires some improvement in market scenario). We note that it is looking at all spaces and adjacencies in the segments it operates. The attempt is to drive growth (as challenger) in multiple sub-categories apart from maintaining dominance in core categories. The focus on (1) product innovation and new launches - target is to maintain the momentum of last two years (~5% contribution), ramping up ecommerce, seed new products and digital spends. We believe increased business complexity is a key risk. The opportunity to invest in its power brands is very large."

"We stay long standing believers in Mohit Malhotra-led reimagining of Dabur. We like the continued thrust on innovation, agility and culture change, utilisation of e-commerce platform to drive new product development (premiumisation), and distribution expansion and increased investment behind power brands to drive growth," the brokerage firm added.

Company portfolio: Dabur

Dabur India Ltd is one of India's leading FMCG Companies. Building on a legacy of quality and experience of over 133 years, Dabur is today India's Most Trusted Name and one of the World's Largest Ayurvedic and Natural Health Care companies. The company's performance was decent on an overall basis. Consolidated gross margin contracted 225bps YoY to 45.9% due to inflationary headwinds in most input cost which was partially offset by pricing and inferior product mix (higher contribution from beverages). EBITDA margin contracted 188bps YoY to 19.3% with a 26% YoY increase in other expenses. Management highlighted that they are followers in a few categories in terms of price increases implying a focus on market shares. Management highlighted further inflation of 9% going forward (on a largely similar base) with an expectation of some respite in 2HFY23, ICICI Securities informs.

Disclaimer

The above stock was picked from the brokerage report of ICICI Securities. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies, the author, and the brokerage house are not liable for any losses caused as a result of decisions based on the article.