ICICI Direct Research has maintained 'buy' rating on Dabur India, with the long-term price target raised to Rs 550 per share. The revised target price is over 15 percent from the home-grown FMCG firm's current market price of Rs 475 per share on BSE.

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"Dabur’s innovation success rate has been low in the past three years. As the

company looks to invest aggressively in power brands and make new launches in these categories, we believe the current strategy will aid volume growth in India and internationally. In addition, the company’s focus on increasing direct reach (up by 40,000 to 1.18 million outlets) and deeper penetration into villages (increase by 3,000 villages to 51,000), would yield results in the foreseeable future. We expect Dabur to generate revenue, PAT growth at 9.7%, 12.1% CAGR, respectively, on the back of strong volume growth of 6% in FY19-21E. Hence, we maintain BUY rating on Dabur with a revised target price of Rs 550," the brokerage firm said in its research report on Wednesday.

Dabur India reported 6.91 percent increase in consolidated net profit at Rs 403.64 crore for the second quarter ended September 30 on Tuesday. Revenue from operations stood at Rs 2,211.97 crore as against Rs 2,124.97 crore in the year-ago period, a growth of 4.09 percent.

Speaking to CNBC-TV18 after the company declared its second quarter results, Mohit Malhotra, CEO of Dabur, said the company is facing headwinds owing to economic slowdown.

“However, our efforts in terms of strategy have paid off and rural for us is also growing at around 6 percent, urban is firing at 3 percent – this is because of the investment that we have made in rural infrastructure. So we are pretty happy with the results,” he said.

The food business has come as a dampener for the company. "If I leave the food segment aside and look at other parts of the company, which is around 80 percent of our business, our volume growth is to the tune of around 7.4 percent. The team has done a great job in this slowing environment,” he added.

Credit Suisse also remains positive on Dabur India over medium term with the global brokerage maintaining an 'outperform' rating on the FMCG firm. It has raised the target price to Rs 535 from Rs 490 earlier. Credit Suisse believes that benign input costs and international business could help margin expansion in the second half of the current fiscal.

At 1.09 pm, Dabur India shares quoted at Rs 474.95 apiece, down by 0.28 percent on BSE, after opening at Rs 480. It traded at Rs 475.55 on NSE, down 0.21 percent

So far this year, the large-cap FMCG firm has returned almost 10 percent to investors, while the one-year return on the stock is over 28 percent.

In the last 10 years, Dabur India has returned over 500 percent to its investors.

Meanwhile, Nifty FMCG, where Dabur India is listed, traded marginally higher by 0.18 percent.

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First Published:Nov 7, 2019 2:15 PM IST