Dabur Stock Price: Shares of FMCG major Dabur India opened higher on Thursday after it announced the acquisition of 51 per cent stake in Badshah Masala. Also, the company reported a market share gain across 95 per cent of its portfolio in Q2FY23 and also announced an acquisition to expand its food business.
The homegrown FMCG major on Wednesday reported a 2.85 per cent decline in its consolidated net profit to Rs 490.86 crore for the second quarter ended September 30. However, its revenue from operations rose 6 per cent to Rs 2,986.49 crore against Rs 2,817.58 crore in the corresponding quarter of the previous fiscal. The earnings before interest, taxes, depreciation, and amortisation (EBITDA) declined 3.2 per cent — from Rs 620.7 crore in the second quarter of the previous fiscal crore to Rs 600.8 crore in the September quarter.
The company also gained market share across 95 per cent of its product portfolio. “We reported a 410 bps market share gain in the Juices & Nectars category, while our share of the Digestives category improved 270 bps. Our Chyawanprash market share increased 120 bps and our share of the Shampoo category improved 40 bps. Dabur share of the Hair Oils market increased 20 bps,” CEO Mohit Malhotra said.
In other news, the firm announced the acquisition of a 51 percent stake in Badshah Masala for a cash consideration of Rs 587.5 crore. The acquisition is expected to be completed before March 31, 2023, it said in its press release.
Plus, the company has announced capex plan of Rs 325 crore for its Indore project with proposed capacity addition for Red Toothpaste, one liter juice and portion packs.
What should Investors Do?
Goldman Sachs believes that the acquisition of Badshah will significantly boost Dabur’s ambitions within the kitchen condiments space. The brokerage has maintained its buy rating and a price target of Rs 680 while citing a sharp rural slowdown and increased competitive intensity as key downside risks.
Morgan Stanley also highlighted weakness within the rural and healthcare segment as a key negative for Dabur. However, market share gains across most of the company’s portfolio is a positive, according to the brokerage. It has maintained its equal-weight rating on Dabur with a price target of Rs 537.
Through the Badshah acquisition, Dabur has entered into the Rs 25,000 crore spices and seasoning market in India, domestic brokerage Motilal Oswal noted.
However, a word of caution was sounded by analysts. Key risks for the company is a sharp slowdown in rural demand growth in India and increased competitive intensity in healthcare products, they said.
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