Dabur India’s stock took a hit recently, dropping 4.3% to reach an intra-day low of Rs 461.10. This decline followed the company’s announcement of an 8.4% year-on-year dip in net profit for Q4 FY25, which totaled Rs 320.13 crore. The report underscored ongoing challenges in urban demand, particularly within general trade channels, which have adversely affected Dabur’s overall performance.
Nuvama Adjusts Target Price for Dabur
International brokerage firm Nuvama Institutional Equities has revised its target price for Dabur, lowering it from Rs 635 to Rs 615, while still maintaining a ‘Buy’ recommendation on the stock. The sluggish urban demand has been a significant factor, compounded by underwhelming performance in the home and personal care categories due to a high base effect. Additionally, Dabur’s healthcare sector faced setbacks from an unusually delayed winter, and the beverages segment suffered due to seasonal weaknesses. The company’s revenue for Q4 FY25 showed minimal growth, remaining flat year-on-year, while EBITDA fell by 8.6%. Nuvama has also adjusted its earnings per share estimates downward, reducing these projections by 4.8% for FY26 and 3% for FY27.
Motilal Oswal’s Insights on Dabur’s Future
While Dabur’s latest quarterly results were disappointing, they aligned with the predictions made by Motilal Oswal. To combat inflation, Dabur implemented a 3.5% price increase, but this was largely offset by various trade schemes and promotional activities. The firm noted that Dabur’s growth is trailing behind both its potential and historical performance. Many of the company’s initiatives have yielded limited results, hindered by a high base, seasonal factors, weak consumer demand, and intense market competition.
Motilal Oswal stated, “Given that most categories have reported revenue declines, the upcoming season is crucial for monitoring performance. Concerns about near-term growth remain, particularly due to weak demand in the summer and the underperformance of key brands.”
Despite the current challenges, the brokerage maintains a positive outlook for consumption in FY26, anticipating a gradual recovery for Dabur, which should positively influence its stock price. They have kept a ‘Buy’ rating with a revised target price of Rs 575.
Overview of Dabur India’s Q4 Results
In Q4 FY25, Dabur India experienced an 8.4% decline in consolidated net profit, falling to Rs 320.13 crore from Rs 349.53 crore in the previous year’s same quarter. Revenue from operations increased slightly by 0.5%, reaching Rs 2,830 crore, compared to Rs 2,814.6 crore during the same period last year. The breakdown of performance across segments revealed:
- Home and Personal Care: Flat YoY growth
- Healthcare: Contracted by 2.2% YoY
- Foods: Grew by 18.4% YoY
- Beverages: Decreased by 8.8% YoY
In summary, while Dabur India faces significant headwinds, analysts remain cautiously optimistic about the future as consumer trends may shift positively in the coming fiscal year.
