Dabur India Shares Decline Following UBS Downgrade: Insightful Investment Analysis

Tuesday, 24 September 2024, 23:42

Dabur India shares have experienced a decline of nearly 5% following a UBS downgrade to a 'Neutral' rating. This stock market news highlights concerns over lofty valuations and risks associated with rural demand recovery. While the broker has increased its price target, rising competition and sales risks could impact future performance. Investors should stay alert to market reactions.

Financialexpress — Dabur India Shares Decline Following UBS Downgrade: Insightful Investment Analysis

Dabur India Shares Fall as UBS Issues Downgrade

Shares of Dabur India Ltd. have fallen nearly 5% after UBS downgraded the stock from 'Buy' to 'Neutral.' Despite this downgrade, the brokerage raised its price target to Rs 700, signaling some confidence in potential upside.

Valuation Concerns and Rural Demand Recovery

UBS pointed out rising downside risks, indicating that the recovery of rural demand has been factored into the stock price. Dabur shares are currently trading at a price-to-earnings (P/E) multiple of 60.3 times, which is significantly above its five-year average of 54 times.

Sales Risks from Real Juices and Coconut Oil Competition

Concerns over Dabur's Real juices, which account for 9-10% of FY24 consolidated sales, have been raised, as a price war in the carbonated soft drinks market could adversely affect sales.
Increased competition in the coconut oil segment, especially with Bajaj Consumer’s entry, adds another layer of pressure, impacting 2-3% of Dabur's consolidated sales.

Strong Festive Demand Might Mitigate Risks

Despite the aforementioned challenges, UBS believes that strong demand in the approaching festive season could help cushion some risks.

EPS Estimates Cut for FY25

UBS has reduced its Earnings Per Share (EPS) estimates for Dabur India for FY25 by 11% due to anticipated slower growth in beverage sales and limited margin expansion. Nevertheless, the revised price target suggests a potential upside of 7% from Tuesday's closing price.

Stock Performance Insights

In terms of stock performance, Dabur shares have recorded positive returns across various periods. In the past month, the stock has yielded a 5.68% return. Over the last six months, it has increased by 20.40%, and year-to-date, it has risen by 12.54%. This indicates a strong upward trend and sustained investor interest.

Looking at a longer timeframe, the stock has delivered an impressive return of over 13.12% in the last twelve months, underlining its attractiveness to investors.

This article was prepared using information from open sources in accordance with the principles of Ethical Policy. The editorial team is not responsible for absolute accuracy, as it relies on data from the sources referenced.