Dabur India shares hit fresh record high on robust growth outlook

Dabur India's healthcare products are set to witness strong performance over the medium-term as customers focus on immunity booster and healthy lifestyle

Dabur India shares hit a record high of Rs 587.95 after they surged 3 per cent on the BSE in the intra-day trade on Thursday, surpassing its previous high of Rs 582.70, touched on June 16, 2021.

The stock of the consumer goods company (FMCG) has outperformed the market in the past one month, by rallying nearly 9 per cent, on hopes of improvement in operational performance. In comparison, the S&P BSE Sensex has added just 0.9 per cent during the period.

Leading fast moving consumer goods (FMCG) major Dabur India on June 23 announced that it will set up a new plant at Madhya Pradesh with an estimated total investment of Rs 550 crore. The firm has already secured a 51 acre land parcel and has begun construction work for the initial phase, which is scheduled to be completed within the current financial year. Apart from the recently launched production linked incentive (PLI) scheme for the food processing sector by the union government, Dabur has availed the state government’s Mega Projects Scheme to materialise its plan.

Dabur India's FMCG portfolio includes nine Power Brands – Dabur Chyawanprash, Dabur Honey, Dabur Honitus, Dabur PudinHara and Dabur Lal Tail in the Healthcare space; Dabur Amla, Dabur Red Paste and Vatika in the Personal care space; and Réal in the Foods category.

"Dabur India’s healthcare products are set to witness strong performance over medium term, as customers focus on immunity booster and healthy lifestyle. Rural segment is less likely to be impacted from lockdown with support from government stimulus. We expect company’s growth momentum to continue aided by robust demand," analyst at Geojit Financial Services said in a March quarter (Q4FY21) result update.

The company’s Q4FY21 performance was partly affected by low stocking, while secondary sales growth was better. However, despite the low stocking impact, sequential slowdown in healthcare was high. Though June quarter (Q1FY22) could boost healthcare growth again, concerns remain over a post-pandemic slowdown. Management targets low single-digit growth in health supplements for FY22.

"The management hopes to protect margins with pricing actions and cost saving programs. Further price hikes in Q1 and some moderation in input prices are expected to improve margins sequentially. Our forecasts include margin gains of 120bps over FY22-23," analyst at Emkay Global Financial Service said in result update.