The stock of personal products maker had hit an all-time high of Rs 506 on Monday, January 27. Thus far in January, it outperformed the market by surging 10 per cent, against 1 per cent decline in the S&P BSE Sensex.
Dabur reported a 7 per cent year-on-year (YoY) jump in revenue at Rs 2,353 crore and a 10.7 per cent growth in operating margin during the third quarter of fiscal 2019-20. The company’s consolidated net profit grew 8.7 per cent YoY to Rs 397.7 crore. The net profit was impacted by one-time impairment in value of investments to the tune of Rs 20 crore. Excluding this impairment, the net profit marked 12.8 per cent growth on YoY basis. Analysts had expected revenue and profit of Rs 2,286 crore and Rs 394 crore, respectively.
Earnings before interest, tax, depreciation and amortisation (Ebitda) improved to 24.1 per cent from 23.7 per cent in the previous year quarter.
The company’s domestic fast moving consumer goods (FMCG) business reported an underlying volume growth of 5.6 per cent during the period. It had reported volume growth of 4.8 per cent in September quarter.
The management, however, said the near-term outlook for demand growth remains challenging with most key categories reporting a steady decline in value and volume growth.
“Dabur’s Q3FY20 results were met with muted management commentary on the near-term sectoral outlook. None of Dabur’s categories are witnessing green-shoots, indicating lack of substantial revival. Valuations are fair at 46.3x FY21 and 40.1x FY22 EPS and prevent us from turning more constructive on the stock,” Motilal Oswal Securities said in a results update. The brokerage firm maintains ‘neutral’ rating on the stock.
Analysts at Dolat Capital maintain ‘accumulate’ rating with buy on dips and arrive at target price of Rs 510 per share.
“We have downward revised our revenues estimates for FY20E and FY21E due to delayed recovery in the domestic demand. Further, we believe that the margins are at peak and there is less scope for further expansion. Hence, we have maintained margin estimates. Higher revision in FY21E adjusted profit after tax is primarily due to higher tax rate assumption,” the brokerage firm said in results update.