Can Dabur India support his margins despite the inflatory pressure?

Et Intelligence Group: Consumer Goods Company Dabur India was able to maintain the operational margin year-on-year in the quarter of June, despite the inflationary pressure, helped by the increase in product prices and cost-saving initiatives.

In view of the softening of the input costs in the current quarter, the company is expected to be reported for the margin improvement for FY26. Moreover, it is expected that the proposed reduction of the plate rates under the GST regime (goods and service tax) will support the question that will be well equipped for the company that offers products in categories such as health care, food, personal and home care.

Analysts have maintained their ‘hold’ and ‘buy’ rating on the shares of Dabur with a 6-21% benefit compared to the final £ 518.9 of Monday on the BSE.

For FY26, the company has led high sales growth with one digit and is expected to improve the margins on an annual basis. In the quarter of September it expects double digits growth due to a lower basis.

For Dabur, the rural market surpassed the urban region in the three months that ended on 30 June, the fifth consecutive quarter of growth. The company reported a consecutive recovery on the urban market. On an annual basis, Dabur registered with a 2% and 3% increase in the turnover of activities and net profit to £ 3.404.6 crore and £ 508.3 crore respectively. The company margin before depreciation and amortization (EBITDA -Marge) remained flat with 19.6%. Of the inflation of 7% in input costs during the quarter, 3-4% was limited by higher product prices and the rest by cost savings initiatives.

According to Motilal Oswal Financial Services, while Dabur’s year-on-year performance was influenced in the quarter of June by a high base, seasonal, weak consumption and high competitive intensity, its quarterly-on-quarte improved. With a positive consumption for views for FY26, the brokers expect a gradual recovery of performance. It has ‘buy’ on the stock with a target price of £ 600. Center Broking said that the worst is over for Dabur, with reference to soothing food inflation, favorable monsoon rains and green shoots in urban demand. It has upgraded the share to ‘buy’ from ‘reduction’, which previously increased the target price to £ 630 from £ 473 earlier. The proposed GST rationalization with two tariff plates is also well postponed for Dabur, given the likely reduction of tax on mass market articles and aspiration goods.