Dabur is a well-known personal care brand that offers Ayurveda-based products across all categories. The company has a dominant position in health supplements, over-the-counter products and ethical products and is rapidly gaining market share in the oral segment as well. Additionally, the company is working to expand its direct reach to 1.5 million stores over the next two years. About 50% of the company’s sales according to the brokerage are made in rural areas.
Turning to the fourth quarter results, the company’s adjusted PAT was flat at Rs. prices and volume growth of 2%
The growth of the agro-economy is seen as a major driver for Dabur:
Brokerage sees the agri-economy recovering due to gains in agricultural exports which will thus give a boost to rural market incomes or sales. Moreover, the company that responds to the demands of its customers is growing both in terms of products and also offering variations within a category, for example, Chyawanprash and Honey. Moreover, the company is leaving no stone unturned and stepping up its distribution channel to accommodate everyone through the e-commerce channel as well.
Buy Dabur for Rs. 680 Target Price: The brokerage report pointed out that the certificate in 5 years yielded 88.4% and increased its price to Rs. 529 as in May 2022 from of Rs. 280-5 years ago. Furthermore, he goes on to mention that Dabur is well positioned to ease pressure on margins as it has little dependence on crude oil-based feedstock. “We maintain our BUY rating on the stock and value it at Rs. 680 by allocating a multiple of 52x FY24 earnings,” the brokerage adds.
The midcap stock is a leading player in technology offerings and integrates software into its electrification, robotics, automation and motion portfolio. The Company mainly operates in 3 segments, including robotics and motion, electrification, industrial/process automation (22%).
Outstanding Q1Cy22 even in tough times: Company revenue edged up 20.8% YoY to Rs. 1,968.3 billion. The increase in revenues is mainly due to the growth of exports as well as service activities as well as the execution of the order backlog. PAT recorded a phenomenal increase of 161.8% year-on-year to Rs. 370.1 crore, including an exceptional item of Rs. 293 crore relating to profit on the sale of the turbocharger business. Order entries are also placed at a robust Rs. 2,291 crores, up 26% year-on-year.
Digitization and Automation Across Segments to Boost Business Prospects – Buy ABB for Rs. 2625 target price
First and foremost, the brokerage firm appears to be benefiting from changes in the energy industry, i.e. from electrification to digitalization and automation. Additionally, the brokerage believes the power equipment major will see improved operating margins given increased capacity utilization, shifting revenue mix, program optimization of costs and localization. Additionally, the company is seeing recovery in some segments, including data centers, renewable energy, electronics, food & beverage, and pharmaceuticals. Additionally, the company is focused on order intake and has a good order backlog in the Q1 period of Cy22. “Expect revenue and EBITDA to grow at a CAGR of approximately 21.3%, 30.9%, respectively,
in CY21E-23E due to strong traction of short-cycle products and services,” the brokerage firm adds.
Buy ABB for Rs. 2625 as deepening the penetration of automation and digitalization across all segments will help the company’s long-term growth.
ICICI is bullish on the stock from a long-term perspective and even changed its rating on ABB India to a ‘buy’ from the previous ‘hold’ and values it at Rs. 2625 (70x on CY23E EPS). This at the current price of Rs. 2254.2, implies an upside potential of over 16.5%.
The stocks are taken from ICICI Direct’s brokerage report after giving due consideration to their results ended in March. The story should not be construed as investment advice in listed stocks.