scorecardresearchDabur India falls over 3.3% as promoters sell stake via block deal

Dabur India falls over 3.3% as promoters sell stake via block deal

Updated: 20 Dec 2022, 02:18 PM IST
TL;DR.
According to Trendlyne shareholding data, promoters had a 67.24% stake in the company as of September 2022. The FIIs and DIIs had 20.2% and 6.7% stake, respectively, in the company.
The company posted a 2.85% drop in its consolidated net profit at  <span class='webrupee'>₹</span>490.86 in Q2FY23, compared to a net profit of  <span class='webrupee'>₹</span>505.31 crore in the July-September quarter a year ago.

The company posted a 2.85% drop in its consolidated net profit at 490.86 in Q2FY23, compared to a net profit of 505.31 crore in the July-September quarter a year ago.

Shares of Dabur India declined over 3.3 percent on Tuesday after promoters of the company sold their stake via a block deal in trade today. As per reports, 1.9 crore shares changed hands at an average price of 571 apiece, aggregating to 1,089 crore.

Earlier, reports said the company's promoters were looking to sell shares worth 800 crore via a block deal.

The stock began the trading session at 576.10 apiece compared to the previous closing price of 589.05 and dipped further to hit an intraday low of 569.55, 3.31 percent lower. 

At 01:00 p.m., the stock was trading at around 581.45 apiece, down by 1.24 percent, on the BSE.

According to Trendlyne shareholding data, promoters had a 67.24 percent stake in the company as of September 2022. The FIIs and DIIs held 20.2 percent and 6.7 percent stake, respectively, in the company.

The stock has delivered returns of just 2.4 percent in the last one year while the Nifty FMCG index rose 24.82 percent during the same period.

The company has an ambitious plan to expand its food business to 500 crore in the next three years and expand into new adjacent categories. As a part of this, recently on October 26, Dabur announced that it has signed a definitive transaction agreement to acquire 51 percent shareholding of Badshah Masala in a deal of 587.52 crore.

Badshah Masala has a significant presence in Gujarat and Maharashtra, and Dabur plans to widen its reach to nearby states such as Rajasthan in the near term, said Geojit Financial Services in its retail equity research report.

Meanwhile, the company said it would invest 325.87 crore in its Indore plant to increase its production capacity. The work for capacity addition would be completed in the next 1.5 years, and production would start in March 2024, the company said.

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Stock price chart of Dabur India.

In Q2 FY23, the company experienced 10 percent inflation and has taken an incremental 2 percent weighted price increase (an overall 6 percent price hike). The management expects gross margin pressure to continue in Q3, while from Q4 onwards, a softening of RM and price hikes are likely to kick in.

The company posted a 2.85 percent drop in its consolidated net profit at 490.86 crore in Q2FY23, compared to a net profit of 505.31 crore in the July-September quarter a year ago.

The revenue from operations, however, rose marginally to 2,986.49 crore during the quarter, a growth of 6 percent when compared to 2,817.58 crore in the corresponding quarter of the previous fiscal. The operating expenses came in higher at 1,794.4 crore, an increase of nearly 10 percent.

Following the September quarter numbers, brokerages remained bullish on the stock. Axis Securities said it continues to believe in Dabur’s long-term growth story and likes management’s focus on strong execution while driving profitable growth.

"A focused approach to scaling up power brands through extension and variants, deeper distribution, and strong management bandwidth drives our confidence in the sustainability of the growth," it added

Axis Securities has a "buy" call on the stock with a target price of 650 per share.

Similarly, ICICI Securities also maintained a "buy" call on Dabur with a DCF-based target price of 670 per share. The brokerage modelled revenue, EBITDA, and PAT CAGR of 10 percent/12 percent/12 percent over FY22-24.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of MintGenie.

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The FMCG sector is likely to reach 16.3 lakh-crore by 2025.
First Published: 20 Dec 2022, 02:18 PM IST