The current quarter trend in Dabur India is likely to sustain into first half of FY15, which is a key positive as compared to peers where the outlook is more muted, says Nomura
Dabur’s 4QFY14 results showed that it has been more resilient than its competition in a challenging overall market environment. Volume growth in its domestic business has been maintained above the 8% mark, which is significantly higher than peers such as Hindustan Unilever, says Nomura in a research note.
Nomura said, “The current quarter trend is likely to sustain into 1HFY15, which is a key positive as compared to peers where the outlook is more muted. Although visibility on 2HFY15F seems more limited due to a variety of reasons, eg, monsoon, results of the general elections and a revival in GDP growth, we see Dabur as one of the better stocks to own into FY15F as it is likely to deliver above sector average growth.”
Nomura upgraded the Dabur India stock to a 'Buy' recommendation with a target price of Rs200 – 12.5% implied upside from current levels. Dabur India is trading at 22.6x FY16F (EPS Rs7.87) versus the sector average of 23.9x. It is now Nomura's preferred pick in the mid cap universe.
Dabur India's forecasted performance is given in the table below:
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