Dabur India, a stalwart in India’s FMCG sector, is navigating choppy waters. Emkay Global Financial Services has reiterated its ‘REDUCE’ call on the stock, citing underwhelming domestic performance and persistent execution gaps. The firm has slashed its 12-month target price to Rs 450, marking a 10% downward revision. Urban slowdown, fading winter-related sales, and ineffective promotional recalibration have dragged revenue and earnings expectations lower. Though international business remains a bright spot, Dabur’s inability to adapt swiftly to consumption shifts in its core categories signals a near-term struggle. The earnings downgrade and valuation compression paint a cautious outlook.

Urban Market Weakness Overshadows Rural Resilience

Dabur’s domestic revenue in Q4FY25 is expected to decline by mid-single digits, even as rural markets showed relative strength.
The impact of unseasonal winter, sluggish urban demand, and a weak base effect from Q4FY24 have created a perfect storm for the company’s top line. Categories such as home and personal care, healthcare, and food are each expected to post volume and value contractions of ~3%, ~4%, and ~10%, respectively.

With rural India contributing nearly 45% of Dabur’s revenue, its comparative stability offers some cushion — but it is not sufficient to offset the broader domestic decline.

Consolidated Revenue Expected to Flatline in Q4

Emkay anticipates Dabur’s consolidated Q4FY25 revenue to remain flat year-on-year, highlighting stagnation in core operations.
Despite the international business likely posting double-digit growth, overall growth is muted. This is due to the domestic business — a significantly larger contributor — witnessing demand fatigue and lack of impactful innovation or aggressive market capture.

In an industry that thrives on agility and evolving consumer preferences, Dabur’s current pace of transformation appears to be lagging.

Margin Compression and Promotion Inefficiencies Weigh Heavily

EBITDA margins are projected to contract by 170 basis points year-on-year to 14.9% in Q4FY25.
Inflationary headwinds, elevated raw material costs, and operating deleverage have combined to pressure profitability. The company has attempted to transition from tactical promotions to long-term brand-building, but results remain underwhelming.

Even with a projected 9% decline in absolute ad spend, promotional spending still stands at 6% of sales, pointing to inefficient allocation amid uncertain returns.

Earnings Outlook Downgraded for FY26–27

Emkay has trimmed Dabur’s earnings estimates by 4–5% over FY26–27, now 8–9% below street consensus.

FY26E EPS revised down to Rs 10.73

FY27E EPS now pegged at Rs 12.11, from Rs 12.8 earlier

Earnings CAGR (FY25–27) now estimated at just 9%

The weak revenue visibility coupled with cost rigidity suggests a longer gestation period before margin expansion resumes.

Valuation De-rated to Reflect Execution Risks

Emkay now values Dabur at 37x FY26E P/E, a 20% discount to its five-year average multiple.
This downgrade — from 40x to 37x — reflects market skepticism on management’s ability to restore momentum. The revised target price is Rs 450, indicating 9.3% downside from the current market price of Rs 496.

Compared to a 52-week high of Rs 672, the stock has declined over 25%, signaling investor disenchantment.

Category-wise Outlook: Healthcare and Foods Remain Laggards

Category recovery remains patchy, with healthcare revenue declining 2.3% in FY25E and foods down 3.7%.

Healthcare: Once a flagship, it’s now showing slower off-take, with demand normalization post-COVID and lower relevance in seasonal cycles.

Foods and Beverages: After benefiting from pandemic-driven consumption shifts, the segment is now seeing base correction and reduced frequency of purchase.

The home and personal care segment is expected to grow marginally at 0.9%, indicating limited new product traction or pricing power.

International Business: The Lone Bright Spot

International markets continue to deliver low double-digit growth, offering a strategic hedge against domestic volatility.
Revenue from overseas operations is projected to grow at 7.1% in FY25E, accelerating to 9.3% in FY27E. The company’s focus markets in MENA, Africa, and the U.S. have responded positively to localized marketing strategies and distribution expansion.

However, the share of international sales remains relatively small in overall revenue (~25%), limiting its ability to fully counterbalance domestic weakness.

Financial Snapshot: Deterioration in RoE and RoIC

Return ratios are under pressure, with RoE expected to dip to 17.5% in FY25E, down from 20% in FY24.

RoIC drops to 37.5% in FY25E from 41.1%

EBITDA margin falls to 18.4% vs 19.4% in FY24

PAT expected at Rs 17,918 million in FY25E, reflecting a 5% year-on-year decline

Despite negative earnings momentum, Dabur’s net debt remains negative (Rs –67,978 million), underscoring its strong balance sheet and cash flow resilience.

Technicals and Investment Levels

Current Price: Rs 496

12M Target Price: Rs 450

Downside Risk: 9.3%

Support: Rs 480

Resistance Levels: Rs 525 / Rs 552

Breakdown Confirmation: Close below Rs 470 may trigger further downside to Rs 440

The stock has underperformed the Nifty-50 by 10.3% over the last 12 months, with near-term trends suggesting continued relative weakness.

Conclusion: Execution Over Expectations

Dabur India finds itself at a crossroads — juggling portfolio complexity, changing consumer dynamics, and competitive intensity. While its global franchise and financial prudence offer strategic levers, execution on the ground appears misaligned with market shifts. Until visible signs of recovery in urban demand, category reinvigoration, and margin discipline emerge, the risk-reward remains skewed to the downside.

Emkay’s ‘REDUCE’ rating and Rs 450 target reflect a belief that without urgent strategic course correction, Dabur may continue to trail its FMCG peers.