The Hindu Business Line : Dabur moves fast on acquisitions

The company's stock has been on a steady climb and touched its 52-week high on Thursday. Dabur touched an intra-day high of Rs 108.70 today and closed at Rs 105.50.

The high has been touched on the back of sound volumes; on the BSE, it registered a volume of 2.35 lakh shares at a total value of over Rs 2.5 crore.

The scrip has appreciated by over 18 per cent in the last month.

Analysts attribute this to the better-than-expected results posted by the company and the market's optimism about the value addition from the acquisition.

Various broking houses have revised upwards their targets on the stock. Earning potential of the company, both top line and bottom line, has also been revised upwards by several brokerages.

Organic growth in domestic and international business, coupled with the inorganic initiatives, such as the Balsara acquisition, is expected to drive future earnings growth of the company, says the research report of a broking house.

The company acquired the oral care brands Promise, Babool and Meswak. Other fast-moving consumer brands Odopic, Odonil and Sanifresh are also now in the Dabur kitty.

Analysts see the acquired products as being complementary to the existing portfolio of the company. Dabur's well-established logistics and supply chain will help provide better distribution to the new products as well.

The scrip has come into the focus of several foreign institutional investors (FIIs) as well, thanks to the acquisition, say brokers. As on December 2004, FIIs hold 4.58 per cent of the share capital of the company, while mutual funds' share is 1.58 per cent.

"It is also a good buy for mutual funds, especially those who have FMCG sector specific funds," said a broker.

Mr Kishen Choksey of K.R. Choksey Shares and Securities said the acquisition has helped the market gradually realise the value of the scrip. "Further growth of the scrip will depend also on the growth of the FMCG sector overall," he added.

The current buying interest in the stock is largely institutional led, say brokers.

Market participants also say that there are only a few FMCG stocks that are performing well and Dabur is now seen as one of the better performers in the category.

"Earlier, our imagination, when it came to FMCG stocks, was limited to HLL. Since the HLL stock has not been performing well at the bourses, there has been a conscious effort to look out for good scrips in this category. Dabur is one such find," said a broker.

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