Even as we anticipate Dabur’s portfolio to be comparatively extra resilient than its friends within the present and post-Covid setting, a few components of the India portfolio might be challenged. GCC publicity may imply some weak spot within the worldwide portfolio as effectively. We issue these features into our mannequin; FY21E/22E EPS forecasts see a 9%/6% minimize. Retain ‘reduce’ in mild of nonetheless punchy valuations; truthful worth (FV) unchanged at Rs 440 per share.
Primary gross sales of all firms have been hit on account of supply-chain disruptions. We are focusing extra on the end-consumption influence. As lengthy as end-consumption demand is undamaged, main gross sales would come again. A great chunk (almost 65%) of Dabur’s India portfolio — haircare, oralcare, homecare and well being dietary supplements — wouldn’t have seen any materials dip in baseline end-consumption. Demand for well being dietary supplements (Chyawanprash, honey, and many others) specifically might have already got elevated or may probably enhance. Other segments (pores and skin, OTC/ moral, digestives & fruit juices) would maybe not be as resilient. Even the resilient segments might be challenged on development on account of a probably slower economic system.
All put collectively, we now estimate a 4% year-on-year development in Dabur’s home enterprise in FY21E, down from round 12% earlier. Nearly 50% of Dabur’s worldwide enterprise comes from West Asia and Africa, the place economies may come beneath important stress on account of weak crude costs and demand. Cross-currency actions add one other layer of unpredictability. We now construct in a 6% drop in Dabur’s worldwide enterprise in FY21E in rupee phrases. For FY22E, we assume development rebounding to 15% ranges.
We have raised our Ebitda margin assumptions regardless of the sharp cuts in income development forecasts. We don’t anticipate a lot SOV stress. Our revised EPS forecasts stand at Rs 10 and Rs 11.three for FY21E and FY22E, respectively. DCF-based truthful worth stands unchanged at Rs 440 per share. ‘Reduce’ stays.