Brokerages cut Dabur targets post muted Q2; recovery hopes on winter demand

Dabur Q2 results: Dabur reported a 5.4 per cent year-on-year (Y-o-Y) rise in consolidated sales, led by 4.3 per cent growth in the domestic business, while India volume growth stood at 2 per cent.

Dabur Q2 results review: FMCG major Dabur India’s September-quarter results came broadly in line with expectations but revealed muted topline momentum, leading most brokerages to trim target prices even as they expect a gradual recovery in the second half of FY26, aided by GST rate cuts and seasonal tailwinds.

 

The company reported a 5.4 per cent year-on-year (Y-o-Y) rise in consolidated sales, led by 4.3 per cent growth in the domestic business, while India volume growth stood at 2 per cent. The Home & Personal Care (HPC) segment remained the key driver, growing 8.9 per cent Y-o-Y, supported by a strong double-digit rise in oral care, while healthcare and foods & beverages segments were muted, rising 1.3 per cent and 1.7 per cent respectively.

 

 

Analysts attributed the subdued growth to the transitory impact of the Goods and Services Tax (GST) transition – 66 per cent of Dabur’s portfolio moved to the lower 5 per cent slab – along with delayed winter inventory-loading, which together hit volume growth by 300-400 basis points (bps). The impact was also visible in September and spilled over into early October.

 

Gross and Ebitda margins expanded modestly by 10 and 20 bps Y-o-Y to 49.4 per cent and 18.4 per cent, respectively, aided by price hikes, cost optimisation, and a favourable mix. Management expects margins to remain range-bound in the medium term as GST-led pricing adjustments settle.

 

Meanwhile, on the bourses, Dabur share price dropped 2.56 per cent to hit an intraday low of ₹488.50 per share. At 12:15 AM, Dabur share price was trading 2.21 per cent lower at ₹490.25. By comparison, BSE Sensex was trading 0.17 per cent lower at 84,261.15 levels.

InCred Equities: Gradual improvement, Hold retained

 

InCred Equities maintained its ‘Hold’ rating with a slightly reduced target price of ₹540 (from ₹545 earlier), citing expectations of gradual improvement in sales momentum from the second half of FY26. The brokerage noted that rural markets continued to outperform urban areas, while the oral care portfolio –  led by Dabur Red and Meswak – outpaced peers such as Colgate and Hindustan Unilever.

 

InCred said Dabur’s focus on rural distribution expansion and smaller pack sizes will help capture demand from GST rate benefits. The launch of Dabur Ventures, a new ₹500 crore investment platform to fund digital-first consumer brands, was seen as a positive long-term strategic move.  ALSO READ | ITC set for steady recovery as cigarettes, FMCG offset Agri drag: Analysts

Nuvama: GST benefits, La Niña to aid winter recovery

 

Nuvama Institutional Equities (Nuvama) retained its ‘Buy’ rating but trimmed its target price to ₹605 from ₹625, after cutting FY26-28 earnings estimates by 2-4 per cent to reflect weak beverages performance. The brokerage said Dabur’s revenue and Ebitda grew 5.4 per cent and 6.5 per cent year-on-year, in line with estimates, with the GST transition causing a ₹100 crore (about 3 per cent) hit to revenue.

 

Nuvama expects a stronger second half supported by a likely La Niña-induced harsh winter, which should boost healthcare and honey demand. It noted that 66 per cent of Dabur’s India portfolio now falls under the 5 per cent GST slab, improving affordability and competitiveness. Rural demand outpaced urban growth by 400–500 bps, it added.

Motilal Oswal: Downgrade to Neutral on weak execution

 

Motilal Oswal Financial Services downgraded Dabur from ‘Buy’ to ‘Neutral’ and cut its target price to ₹525 from ₹545, due to persistent execution challenges and muted management commentary for H2. While gross and Ebitda margins were broadly stable, the brokerage said Dabur’s revenue growth has been subdued for two years due to weak rural demand, extended monsoons, and slow channel restocking.

 

The brokerage lowered its valuation multiple from 45x to 40x, saying the expected GST benefits and winter portfolio recovery may not immediately translate into strong growth. “Dabur’s consistent weak execution is limiting our confidence in its growth recovery despite macros turning positive,” it said.  ALSO READ | 3 reasons why Nomura raised its target price on Swiggy to ₹560; check here

JM Financial: Inline results; Add retained

 

JM Financial maintained its ‘Add’ rating with a target price of ₹535, saying the results were largely in line with expectations. It noted Dabur’s domestic FMCG business grew 5.7 per cent, with oral care and skin care leading gains, while international markets like the UK and Turkey performed well. Nepal, however, saw a 15 per cent decline due to political disruptions.

 

The brokerage said management’s conservative guidance of mid-to-high single-digit revenue growth in H2FY26 looks achievable, helped by GST rationalisation, expected colder weather, and steady rural demand. 

 

“Steady recovery in domestic sales will be key for rerating from current levels,” JM Financial analysts said, adding that valuations have already corrected below long-term averages.

Dabur: Cautious outlook

 

While all  brokerages acknowledged stable margins and market share gains in key segments, the consensus pointed to limited near-term triggers. 

 

Most expect demand recovery to accelerate in the second half, supported by GST-led price adjustments, improving rural sentiment, and seasonal strength in health and wellness products. However, with target prices revised downward to and a split in rating, the Street sentiment on Dabur remains mixed.