Mirae Asset Sharekhan has issued a "BUY" recommendation on Dabur India Limited, setting a revised price target of Rs 623. The brokerage highlights Dabur’s resilient market position, ongoing premiumization, and robust rural growth, despite a subdued first quarter of FY26 influenced by challenging weather conditions and muted demand in certain segments. Sharekhan emphasizes the company's strong fundamentals, significant market share gains, and strategic exits from margin-dilutive categories as critical positives for medium-term performance, reinforcing its bullish outlook amid sector headwinds and competitive pressures.

Research Call and Price Levels

Broker: Mirae Asset Sharekhan issues a "BUY" call for Dabur India Ltd. - Current Market Price (CMP): Rs 533 - Revised Price Target (PT): Rs 623 - 52-week high/low: Rs 672/Rs 420
Valuation Multiples

Trades at 48x/43x its projected FY26E/FY27E earnings

Price/Earnings (P/E) and EV/EBITDA ratios remain competitive in comparison to sector peers

Q1FY26 Performance: Navigating Headwinds

Revenue and Profitability Overview - Consolidated revenues grew marginally by 1.7% year-over-year to Rs 3,405 crore, aligning with consensus expectations - Adjusted Profit After Tax (PAT) increased 2.9% YoY to Rs 509 crore, outperforming analyst estimates - Operating Profit Margin (OPM) held steady at 19.6%, aided by a sharp reduction in advertisement expenses
Impact of Seasonality and Weather

Peak summer unseasonal rains adversely affected beverage and glucose portfolios, leading to a 14.3% YoY decline in Foods & Beverages revenues

Excluding the seasonal portfolios, Dabur achieved a 7% revenue growth, demonstrating underlying business resilience

Business Segments: Divergent Momentum

Home and Personal Care Surges - Home & Personal Care posted a robust 5% YoY growth, driven by notable market share gains in oral care, skin care, and home care - Oral Care: Toothpaste business expanded by 7.3%, and the herbal line outpaced non-herbal by 440 basis points
Healthcare Maintains Strategic Growth

Despite a 4.4% YoY revenue decline, key products like Chyawanprash and Honey posted double-digit growth, benefiting from early monsoons

Price increases of 6% applied to mitigate raw material inflation in the healthcare portfolio

International Business Delivers Upside

International business grew robustly by 12.8% in Q1FY26 (13.7% in constant currency)

Strong performances in the UK (+41%), Turkey (+36%), SSA (+20%), and Namaste (+30%), highlighting Dabur’s expansive international footprint

Market Share and Strategic Exits

Market Share Expansion - Dabur gained market share in 95% of its product portfolio - Odomos, Digestives, Hair Oils, Juices & Nectars, and Odonil drove market share increases by 261/228/214/207/183 basis points, respectively
Portfolio Rationalization

Strategic withdrawal from tea, adult baby diapers, sanitizers, and breakfast cereals, shedding margin-dilutive categories worth Rs 8 crore in cumulative sales

Operational Highlights and Financials

Margin Management and Inflation Response - Gross margins fell 75 bps YoY to 47% amid raw material inflation (7% in Q1, 8% projected), partly offset by effective price increases and cost-efficiency initiatives
Ad Spend Adjustment

Sharp 14% YoY drop in advertisement spend, denoted as a one-off due to trade and consumer schemes; promotional investments set to normalize going forward

Rural vs Urban Performance

Rural markets outperformed urban projections for the fifth consecutive quarter, with 390 bps higher growth; urban consumption is expected to recover through modern trade channels

Outlook and Investment Rationale

Short-term Outlook: Gradual Recovery Anticipated - Dabur expects double-digit growth in Q2FY26 on a low base and high single-digit growth for full year; headwinds likely to ease as monsoon and inflation stabilize
Medium-Term Drivers

Revenue and PAT are projected to achieve 9% and 13% CAGR for FY25-FY27E, underpinned by sectoral tailwinds, premiumization, portfolio rationalization, and distribution expansion

Strategic focus on core brands, new launches, and channel penetration poised to drive value growth

Sector Positioning

Mirae Asset Sharekhan’s "3R Matrix" rates Dabur positively for sector, quality, and valuation, citing strong industry fundamentals, capable management, and healthy earnings growth potential

Peer Comparison: Valuation Band and Efficiency Table

Key Risks and Catalysts

Risks - Heightened competition in core segments - Volatility in raw material prices may pressure margins - Any unexpected slowdown in rural demand could undermine near-term growth projections
Catalysts

Strategic investments in power brands, premiumization, and new launches

Easing raw material inflation, improving operating leverage

Expansion in rural and international markets

Bottomline: Investment Thesis and Strategic Levels

Sharekhan maintains a buy rating on Dabur India, with an unwavering conviction in the company's fundamental strengths, prudent portfolio management, and adaptability amid sectoral challenges. The revised target of Rs 623 signifies substantial upside potential from current levels, underpinned by robust financials and enduring sector leadership. For investors, accumulation is advised at Rs 533, with a long-term orientation, while monitoring peer valuations and market dynamics closely.

Investor Actionable Levels

Dabur remains a compelling play for investors seeking steady growth, sectoral resilience, and active participation in India’s fast-moving consumer goods story.