Large Cap FMCG Stock: Rs. 2.75 Dividend, November 8 Record Date; BUY Dabur India?

One of the leading FMCG companies in India is Dabur India Limited. Dabur is one of the world's largest ayurvedic and natural health care companies, and it has been the most reputable name in India for 140 years. Eight different brands are included in Dabur India's FMCG portfolio today: Real in the Food & Beverages area; Dabur Amla and Dabur Red Paste in the Personal Care category; and Dabur Chyawanprash, Dabur Honey, Honitus, pudinHara, and Dabur Lat Tail in the Healthcare sector.

Dabur India Dividend

"Pursuant to Regulations 30 and 43 of the Listing Regulations, we wish to inform you that the Board of Directors of the Company in its meeting held today have declared Interim Dividend of Rs. 2.75 per equity share having face value of Re. 1/- each (i.e., 275%) for the financial year 2024-25. Pursuant to Regulation 42 of the Listing Regulations, the Company has vide its letter dated October 16, 2024 already informed to Stock Exchanges regarding the Record Date of November 08, 2024, fixed for ascertaining the name of the Members/Beneficial Owners entitled to receive the Interim Dividend on equity shares for the Financial Year 2024-25," said the company in a stock exchange filing.

The Board of Directors of Dabur India Ltd declared an interim Dividend of 275% for 2024- 25. "Continuing with our payout policy, the Board has declared an lnterim Dividend of Rs 2.75 per share, aggregating to a total payout of Rs 487.39 Crore," Dabur lndia Ltd Chairman Mr. Mohit Burman said.

Dabur India Financials

For the fiscal second quarter that ended in September (Q2FY25), Dabur India reported a 17.5% year-on-year decline in its consolidated net profit to Rs 425 crore. In the same time last year, the company generated a profit of Rs 515.05 crore. The consolidated net profit dropped 15.02% sequentially or QoQ. Dabur's consolidated revenue from operations plummeted 5.5% YoY to Rs 3,028.59 crores in the September quarter from Rs 3,203.84 crore in Q2FY24. The FMCG giant's EBITDA, which came to Rs 704.1 crore, is down 9.4% from the same period the previous year.

"Over the past couple of years, we have witnessed a marked shift in consumer buying patterns in favour of emerging channels like quick commerce, driven by the convenience this channel offers. This has resulted in the emerging channels growing at high teens, putting the General Trade under stress. To address the changing dynamics in the marketplace and support our distributor partners in tiding over the challenges, we took a proactive decision to rationalize inventory in the General Trade, which resulted in a temporary dip in sales during the quarter. However, the move has resulted in improving the long-term health and hygiene of our business, paving the way for healthy growth going forward," Dabur India Limited Chief Executive Officer Mr. Mohit Malhotra said. "This one-off adjustment notwithstanding, Dabur's business fundamental remains strong with secondary sales for the second quarter growing at over 2% and our 5-year Revenue CAGR for the India business at over 8%."

"We expect recovery in consumer demand in the coming quarters, both in urban and rural markets. We are focusing on strengthening our competitive edge in the marketplace by investing in scaling up our rural footprint and rolling out consumer-centric innovations. Our focused approach towards expanding our rural footprint to over 1.22 lakh villages reaped rich dividend as rural demand outpaced urban demand by 130 bps during the quarter. To cater to this wider network, we have expanded our product basket with the launch of affordable and rural-specific pack bundles across categories, besides investing in consumer activations in the hinterland to establish a better connect with our consumers," Mr. Malhotra added.

Dabur India Share Price Target

"With a struggling beverages business, DABUR is reliant on macro and weather tailwinds to deliver low double-digit sales growth. We expect La Nina to be favourable for DABUR's high-margin healthcare portfolio, including Chyawanprash, which has remained soft over the past two years. Meanwhile, 50% rural sales exposure helps active participation in rural recovery. We value DABUR at 52x 12M to Sep'26 EPS using P/E relative to the NIFTY 50 index. We reduce TP to Rs 697 from Rs 762 due to earnings downgrades partly offset by higher NIFTY multiples," said the research analysts of BOB Capital Markets Ltd.

Disclaimer

The recommendations made above are by market analysts and are not advised by either the author, nor Greynium Information Technologies. The author, nor the brokerage firm nor Greynium would be liable for any losses caused as a result of decisions based on this write-up. Goodreturns.in advises users to consult with certified experts before making any investment decision.