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Prabhudas Lilladher
Dabur India (Buy)
CMP: ₹276.50
Target: ₹318
Dabur remains a compelling play on the ₹10,000-crore herbal and natural products market which is growing at 15-20 per cent CAGR. The company has launched premium products in chyawanprash, hair oil, air freshener, hajmola, skin bleach and beverages to cater to the emerging Indian consumer. Dabur is revamping its distribution to increase the chemist coverage 3x (Project CORE), direct rural reach (Project Double) by 3.5x and focus on key urban centres under Project 50:50, which will thus boost sales.
Dabur competes with Patanjali for 55 per cent of its domestic sales and is vulnerable due to 15-30 per cent lower pricing by Patanjali (promoted by Yoga Guru Baba Ramdev) in categories such as toothpaste, honey, chyawanprash and hair oils. However, overall impact on Dabur would be limited as the promotion of herbal products by Patanjali will expand the market.
Dabur’s overseas sales and profit growth are likely to accelerate on expected turnaround in Namaste.
Risk: Political disturbances in West Asia, Nepal and currency devaluation in Turkey.
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