UBS has downgraded its rating for Dabur to “Neutral” while raising the target price to ₹700. The downgrade is attributed to potential sales risks and increased competition in key product segments.
UBS highlighted two main concerns for Dabur: a potential sales risk to its Real juices, which accounted for about 9-10% of consolidated sales in FY24, due to the impact of a carbonated soft drink (CSD) price war in India, and heightened competition in the coconut oil segment, which represented 2-3% of consolidated sales in FY24, following the entry of Bajaj Consumer.
With rural demand recovery largely priced in and valuations nearing two standard deviations above the five-year mean, UBS believes downside risk is rising. However, the brokerage acknowledges that Dabur’s other segments are performing well and expects strong demand during the upcoming festive season to mitigate some of these risks.
Additionally, UBS has cut its FY25 earnings per share (EPS) estimate for Dabur by 11% to account for lower beverage sales growth and limited margin expansion in FY25.
Disclaimer: The information provided is for informational purposes only and should not be considered financial or investment advice. Stock market investments are subject to market risks. Always conduct your own research or consult a financial advisor before making investment decisions. Author or Business Upturn is not liable for any losses arising from the use of this information.
Ahmedabad Plane Crash