Hold Dabur, target of Rs 116: Indiabulls Securities
Indiabulls Securities Research has maintained its hold rating on Dabur India with a price target of Rs 116, in its report dated May 21, 2009.
“Dabur reported an impressive fourth quarter numbers as its net sales grew 20.6% yoy to Rs 7.3 billion driven primarily by 13.7% volume growth. The increase has come from Dabur’s flagship segments Consumer Care Division (CCD) and Consumer Health Division (CHD), which grew 18.4% and 18.8% respectively. EBITDA margin also increased by 60 bps yoy to 18.3% during the quarter due to soft raw material prices. In our view, the Company maintains strong fundamentals and it is gaining traction both in portfolio mix and into newer geographies.”
“We expect Dabur’s revenue to grow at a CAGR of 16.6% during FY09-FY11 on the back of a healthy volume growth driven by its existing popular brands and new launches. We expect Dabur to expend heavily in advertisement during the new launches, which is likely to help in grabbing the early market share. At the CMP the stock trades at a forward P/E of 19.8x and 16.8x for FY10E and FY11E. Based on our DCF valuation (assuming a WACC of 12.2%, Rf of 7.91%, and terminal growth of 5%) we arrived at a target price of Rs 116, which provides an upside of 3.9% over the CMP of Rs 111.85. Therefore, we maintain our hold rating on the stock,” says Indiabulls Securities’ report.
Related posts: