Dabur India - Resilient Performance in Challenging Environment | Initiating Coverage

Dabur reported a strong start to FY27, with consolidated revenue growth of 10.6% YoY, driven by broad-based growth across both domestic and international businesses. India FMCG revenue grew 9.5% YoY, supported by 5.0% volume growth, while the IB grew 15.5% YoY (INR terms) despite geopolitical disruptions. The HPC business posted 12.3% growth, F&B business grew 7.2% and the Healthcare vertical reported 5.5% growth during the quarter. The management reiterated its guidance of double-digit price led consolidated revenue growth for FY27E, supported by resilient domestic demand and a favorable currency impact on IB. Despite inflationary pressures, the company remains confident of protecting margins through calibrated pricing actions and expects margin expansion. We expect Dabur India to deliver healthy earnings growth, supported by premiumization, innovation, market share gains and continued strength in rural and international markets. However, near-term commodity inflation and geopolitical uncertainties may keep margins under watch. We initiate coverage on Dabur India with an 'Accumulate' rating. Valuing the stock at 36x FY28E EPS, we arrive at a target price of Rs. 485.

Q1FY27 Performance - Revenue and EBITDA in line, while APAT ahead of consensus estimates:

Revenue grew by 10.6% YoY to Rs 37.6bn. GM expanded by 30bps YoY to 47.3%. A 30/10bps decline in RM cost/ employee exp was partially offset by 20/20bps increase in Ad spends/other exp respectively. Consequently, EBITDA margins expanded by 10bps YoY to 19.7%. EBITDA grew by 11.0% YoY to Rs 7.6bn - was in line with consensus estimates. APAT grew by 15.0% YoY to Rs 5.9bn - was 4.6% ahead of consensus estimates.

Segment Performance:

Home & Personal Care (HPC) remained the key growth driver, led by strong double-digit growth in Hair Care (Hair Oils and Shampoos), near double-digit growth in Oral Care, healthy increase in Skin Care and mid-single-digit jump in Home Care. Healthcare posted steady growth, supported by strong performance in Digestives, OTC & Ethicals, and Health Juices, while Honey also maintained healthy momentum. Food & Beverages delivered robust growth despite weather-related disruptions early in the quarter, with premium beverages such as Real Activ Juices and Coconut Water witnessed accelerated traction, alongside strong growth in the Fizz portfolio. The IB continued its healthy momentum with 15.5% YoY growth (INR terms), driven by broad-based performance across Bangladesh, Egypt, Turkey, the UK & EU, and MENA, despite geopolitical challenges.

Outlook:

We expect Dabur to sustain low double-digit revenue growth over the medium term, supported by continued strength in the domestic business, premiumisation, innovation, GTM transformation and healthy rural demand alongside a gradual recovery in urban consumption. The company's strong momentum across the Home & Personal Care portfolio, improving international business and calibrated pricing strategy are expected to support growth, while cost-saving initiatives, favourable product mix and deferred price hikes should drive gradual margin expansion despite commodity and weather-related uncertainties.

Valuation:

We forecast Revenue/EBITDA/PAT CAGR of 10.0/12.7/11.8% over FY26 - FY28E. Dabur remains well positioned to deliver consistent earnings growth. The company's strong brand portfolio, disciplined cost management and calibrated pricing strategy position it well for sustainable profitable growth. However, re-gaining high single-digit to double digit volume growth momentum remains a challenge for Dabur. We initiate coverage on Dabur India with an 'Accumulate' rating. Valuing the stock at 36x FY28E EPS, we arrive at a target price of Rs. 485.

Company website: https://www.dabur.com

*CMP is as per report published date

Click to download the full Dabur India Ltd Q1FY27 Company Update

Analyst:

• Sachin Bobade - HOR, Institutional Equities (NISM-201700098683)
• Akshay Patel - Senior Research Associate, Institutional Equities (NISM-202100071038)

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Frequently Asked Questions (FAQs) – Dabur India Q1FY27 Company Update

Dabur India's latest quarterly performance reflects resilient demand, healthy execution and continued focus on premiumisation. Below are answers to common investor questions based on our institutional research.

1. What is the latest rating on Dabur India?

We initiate coverage with an Accumulate rating and a target price of ₹485, supported by healthy earnings visibility and steady business fundamentals.

2. What drove Dabur India's Q1 FY27 performance?

Revenue growth was driven by broad-based performance across Home & Personal Care, Foods & Beverages, Healthcare and the international business, supported by premiumisation and volume growth.

3. How is Dabur managing margin pressures?

The company expects to protect profitability through calibrated pricing, cost-saving initiatives, favourable product mix and operational efficiencies despite commodity inflation.

4. What are the key long-term growth drivers?

Premiumisation, innovation, rural expansion, stronger international operations, distribution expansion and disciplined brand investments remain key long-term growth catalysts.

5. What risks should investors monitor?

Commodity cost inflation, geopolitical uncertainties, competitive intensity and the ability to sustain healthy volume growth remain key monitorable factors.

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