Dabur India’s net profit in the quarter ended September 2020 rose 19.3 percent to Rs 482.9 crore from Rs 403.8 crore in the year-ago quarter. Net profit beat Street estimates of Rs 441 crore.

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Revenue from operations during Q2FY21 increased 13.7 percent to Rs 2,516 crore from Rs 2,212 crore, YoY.

Dabur India witnessed a robust domestic volume growth of 16.8 percent led by immunity-boosting, Ayurveda and naturals product portfolio.

The operational performance of the company was also better than expected as EBITDA rose 16.3 percent to Rs 569.4 crore from Rs 489.5 crore while EBITDA margin expanded by 50 bps to 22.6 percent as against 22.1 percent, YoY.

Read here: Dabur Q2 net profit rises 19% YoY to Rs 483 crore; Volume growth at 16.8%

Here’s what brokerages say:

CLSA

Global brokerage CLSA believes that Dabur reported a volume-driven earnings beat in 2QFY21.

“The accelerated adoption of healthcare helped the company report 49 percent growth in its healthcare portfolio. Other noteworthy acceleration was seen in oral care (+24%) and skin care (+38%, led by its hygiene portfolio),” CLSA said.

The company’s management noted growth momentum may decelerate, but it remains healthy on multiple tailwinds like the low penetration of healthcare, a recovery in institutional channels, new launches and a recovery in international business.

“The company is looking to accelerate its top-line with the deployment of cost savings in higher brand spending. To capture top-line acceleration, we raise our estimates 4% over FY21-FY23, while our earnings remain largely unchanged for FY22 and FY23, accounting for higher brand spending,” CLSA said.

The brokerage maintained a 'Buy' rating on the stock and raised the target price to Rs 620 from Rs 590 earlier, based on 52x Sep 22CL earnings.

Credit Suisse

Credit Suisse has an 'Outperform' call on the stock and raised the target to Rs 590 per share.

The brokerage believes that the company’s healthcare growth decline will be compensated by a recovery in foods and international business.

Credit Suisse increased its FY21-23 EPS estimates by 4-6 percent.

ICICI Direct

With a strong tailwind from health and immunity products, Dabur India got the new structural growth levers, ICICI Direct said. “We believe the company would continue to witness strong growth in the medium term from these trends,” it added.

Moreover, it is of the view that a benign commodity cost & savings program leave enough scope to increase margins over the long term.

The brokerage expects the company to witness earnings CAGR of 12.8% over FY20-23E. “We value the stock at 50x FY23 earnings for the target price of Rs 595 per share and maintain Buy recommendation,” it added.

Yes Securities

The stock is currently trading at a rich multiple 48x/42x FY22/23E earnings, which indicates that future stock returns will predominantly be a function of earnings growth, which should be best-in-class for the next 2-3 years. With multiple engines like healthcare, oral care, shampoo firing at the same time coupled with multiple margin levers and aggressive innovation, Dabur looks set to deliver 15-20% earnings growth and remains a strong 'buy on dips' stock despite seemingly rich valuations.

At 11:35 am, the shares of Dabur India were trading 2.26 percent higher at Rs 527.10 apiece on the BSE as against 0.43 percent gains on the benchmark Sensex.

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