Dabur shares fall 4% after Q3 results. Should you buy, sell or hold the stock?

Shares of Dabur India fell nearly 4% to Rs 533 in Friday's trade on BSE after the company reported a 5.4% year-on-year (YoY) decline in consolidated net profit for the December quarter at Rs 476 crore.

However, the company's revenue from operations grew a moderate 3.4% to Rs 3,043.2 crore. In constant currency terms, the topline grew 5.7% YoY. The international business reported 4% growth in constant currency terms.

Input cost pressure saw a consolidated operating profit decline of nearly 3% YoY to Rs 610 crore, and the operating margin contracted a sharp 130 basis points to 20%.

Dabur’s homecare business registered strong 18% growth. The Ayurvedic OTC business grew sharply at 17% in Q3, while the digestives category reported 12% growth. The food and beverages business reported 6.4% growth during the quarter, while the toothpaste business ended the quarter with 32% growth, led primarily by the steady demand for the flagship Dabur Red paste.

On the international front, the Turkey business grew 97%, while the Egypt business was up 35%. The Sub-Saharan Africa business reported 17% growth, while the SAARC market grew 8%.

On a year-to-date (YTD) basis, the Dabur India scrip has corrected about 5% on BSE.

Should you buy, sell or hold the stock? Here's what analysts say:

Prabhudas Lilladher
Prabhudas Lilladher retained its Accumulate rating on Dabur with a target price of Rs 609.

"We believe Dabur is a formidable play on growth revival in rural India, given its 45% contribution to overall sales. We believe sustained innovation and launches in core segments like Healthcare, F&B and Oral Care have the potential to accelerate growth in coming quarters," it said.

HDFC Securities
HDFC Securities maintained its Add rating on Dabur with a target of Rs 585. "The rural market is seeing down-trading and is still in the recovery phase. We value the stock at 42x P/E on Dec-24E EPS to derive a target price of Rs 585," it said.

Motilal Oswal
Domestic brokerage Motilal Oswal has a Buy call on Dabur with a target of Rs 650. "Overall sales growth trajectory has revived in recent years – a continuation of the turnaround seen by Dabur under the new CEO. Beyond the near-term, rural demand recovery, material cost stability and a less challenging base are likely to result in healthy earnings growth from FY24 onwards," Motilal said.

ICICI Securities
ICICI Securities maintained its Buy rating on the stock with a DCF-based revised target price of Rs 650 (Earlier Rs 670).
"We stay longstanding believers in Mohit Malhotra-led reimagining of Dabur. We like the continued thrust on innovation, agility and culture change, utilisation of e-commerce platforms to drive new product development (premiumisation), distribution expansion and increased investment behind power brands to drive growth," the brokerage said.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)