Brokerages highlight that while Dabur’s long-term growth trajectory remains intact, near-term uncertainties, driven by a lag in demand recovery, warrant a cautious stance
While the management of the company remains confident of preserving gross margins and improving operating margins through a better mix, portfolio premiumisation, and ongoing cost rationalisation efforts, a report has stated that a meaningful recovery for Dabur India may still take time.
Axis Securities, in its report, emphasised that Dabur continues to grapple with near-term headwinds from inflation, seasonal volatility, and high base effects, further exacerbated by operating deleverage. Weakness in health supplements and subdued beverage demand, especially in urban areas, remain key drags, it noted.
While Dabur’s long-term growth trajectory remains intact, near-term uncertainties, driven by a lag in demand recovery, warrant a cautious stance. The reports have emphasised that while the structural investment case in many of Dabur’s categories remains attractive, execution has been weak.
“While management remains confident of a gradual recovery, aided by rural traction and sustained brand investments, we believe meaningful revival may take time. Hence, we maintain our Hold rating on the stock,” Axis Securities added in its report.
Dabur’s Q1 Performance
The science-based Ayurveda major Dabur India witnessed a 3 per cent year-on-year (YoY) growth in consolidated net profit for the first quarter of 2025-26 at Rs 514 crore, up from Rs 500 crore a year ago. Dabur ended Q1 with consolidated revenue of Rs 3,405 crore.
Unseasonal rains during peak summer months impacted the performance of Dabur’s summer-centric portfolio, particularly in categories like beverages. Excluding this seasonal portfolio, the business grew by 7 per cent in Q1 of 2025-26.
“While urban markets, riding on the strong performance of modern trade and emerging channels, have shown signs of sequential improvement, it still lags rural growth. We recognise that rural consumers are the growth engine for us,” highlighted Mohit Malhotra, Chief Executive Officer (CEO) of Dabur India.
Core categories like digestives, oral care, hair care, skin care, and home care saw steady growth. The India business grew 4.3 per cent YoY (excluding seasonals), while international business reported strong 13.7 per cent constant currency growth in Q1FY26.
Growth Prospects
The Axis Securities report added that management maintains a high single-digit growth outlook for FY26, with expectations of double-digit growth for Q2FY26 on a low base, though the beverages portfolio may remain subdued with low single-digit growth.
“Post Q1FY26 results, we have reduced our EPS forecasts marginally by 1.1 per cent for FY26 and 3.3 per cent for FY27. While the structural investment case in many of Dabur’s categories remains attractive, execution has been weak because of a combination of internal and external factors. Earnings growth, despite a weak base of the last five years (3.3 per cent) and assuming reasonable recovery, is not enough to warrant a multiple of over 45-times FY27E EPS,” Nirmal Bang said in a report, while maintaining Hold due to a limited upside.
