HSBC upgrades Dabur India to 'buy'

HSBC has upgraded Dabur India to buy from hold and raised target price to Rs 490 from Rs 410.

HSBC said Dabur's first quarter results were impressive with 21 per cent volume growth driven by broad-based acceleration of growth across categories.

The firm said Dabur has shaped its marketing mix significantly since the Patanjali disruption began to some of its key categories such as honey and chyavanprash.


"Dabur is now accelerating growth even in these categories. We think Dabur is now far more aggressive and prepared to deal with competition than ever before," said Dabur.

HSBC said that while Dabur's volume growth benefits from low base, double digit volume growth momentum is here to stay, which will be a key catalyst for stock performance.

"We pencil in full year volume growth of 14.5%. Even as Dabur sees flat gross margins for FY19, we expect operating leverage to help it deliver operating margin expansion," said HSBC.