Motilal Oswal stays 'Neutral' on Dabur amid geopolitical risks; trims EPS

Motilal Oswal Financial Services has maintained a ‘Neutral’ rating on Dabur India with a target price of ₹515, implying about 13 per cent upside from the current levels, citing steady sequential improvement in the domestic business but near-term risks to input costs and international performance due to geopolitical disruptions.

 

The brokerage said geopolitical uncertainty is beginning to weigh on Dabur’s international business, particularly due to supply-chain disruptions around key shipping routes such as the Red Sea and the Strait of Hormuz.

 

It has trimmed earnings per share (EPS) estimates by 2–3 per cent and values Dabur at 40x Mar’28E EPS.

 

International business under pressure; guidance moderated

Motilal Oswal said Dabur’s international business has been impacted by disruption in product movement in Gulf Co-operation Council (GCC) markets, alongside softer consumption trends as residents remain indoors and tourism has weakened. The Middle East and North Africa (MENA) region contributes 8 per cent to Dabur’s consolidated revenue, while Turkey contributes 3–4 per cent, it said.

 

As a result, management has moderated near-term consolidated growth guidance from high single digits to mid single digits, largely due to the slowdown in international markets, according to the brokerage. 

Domestic demand showing sequential improvement

The brokerage said Dabur’s India business is seeing sequential improvement in demand trends, with domestic business expected to show better year-on-year (Y-o-Y) growth in Q4FY26 versus Q3Y26. It added that rural demand continues to outpace urban demand, though the gap has narrowed—suggesting a gradual recovery in urban consumption.

 

Analysts noted that Dabur has not taken price hikes yet, and management expects FY27 growth to be largely volume-led, subject to commodity volatility.

Category trends: Oral and hair care strong; healthcare muted but improving

The note highlighted broadly healthy trends across categories:

 

Oral care: Dabur holds 16 per cent market share; sees room for further gains. 

Hair care: Strong double-digit growth, aided by shift toward higher-margin perfumed hair oils. 

Healthcare: relatively muted but sequentially improving (some OTC brands showing improvement). 

Home care: Improvement toward high single-digit growth, partly aided by a favorable base. 

Foods & beverages: foods steady; beverages expected to remain low single digit near-term, with a better FY27 outlook aided by a favorable base 

Margins: Steady near term; possible hikes from mid-April if costs stay high

 

On profitability, Motilal Oswal said management expects steady margins in the near term, with Earnings before interest, tax, depreciation and amortisation (Ebitda) margins expected to expand Y-o-Y. However, the company may consider price hikes from mid-April onward if crude-linked input costs remain elevated.

 

The brokerage flagged packaging as a key cost lever, noting packaging material costs are 15 per cent of sales and 25–30 per cent of total raw material costs. 

Quick commerce rising share of India revenue

Motilal Oswal said quick commerce now contributes 4–5 per cent of Dabur’s India revenue—about half of total e-commerce sales—and continues to grow strongly in the 30–40 per cent range.

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