DABUR Capital Markets Day 2023: Key Takeaways and Analyst Outlook
DABUR held its Capital Markets Day 2023 on September 15, 2023, where the company’s CEO and divisional heads presented their medium-term strategy. The company reiterated its focus on the following four key areas:
- Growing power brands into power platforms
- Premiumizing the portfolio
- Entering into new categories and increasing total addressable market (TAM)
- Expanding into new variants and formats
These efforts have yielded results over FY19-23, with the company gaining market share in 90% of its portfolio, achieving high-single-digit revenue growth, and increasing the share of innovations to 4% from 1.4% in FY19.
Analysts believe that sustained innovation and launches in core segments will help DABUR achieve double-digit sales growth. With inflationary headwinds largely abating, DABUR is looking to gradually increase ad-spends from 5.6% in FY23 to earlier levels to support its brands. Recovery in rural markets is key to accelerating sales growth, as this segment accounts for 50% of the company’s revenues.
Analysts believe that scalable opportunities in Badshah, Beverages, new launches like baby care, and brand extensions hold the key to medium-term growth. Additionally, the company’s focus on cost reductions through higher freight optimization, lower distance to market, and multiple vendors for raw materials and cartons will help remove costs from the system and improve profitability.
Analyst Target Price
Analysts estimate 15.4% EPS CAGR over FY23-25E and arrive at a DCF-based target price of Rs600 (45.6xJun25 EPS). Dabur trades at 43.0x Jun25 EPS with 21.2% ROE and 50% dividend payout. Analysts retain ‘Accumulate’ rating on the stock.
Overall, DABUR is a well-positioned company with a strong track record of growth. The company’s medium-term strategy is focused on expanding into new categories, premiumizing the portfolio, and increasing innovation. Analysts believe that these efforts will help DABUR achieve double-digit sales growth and improve profitability.
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Market Update for September 22, 2023
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