Dabur India Limited, a prominent player in the Indian consumer goods sector, has seen its shares take a notable hit, closing at ₹618.50 on the National Stock Exchange (NSE). This decline, amounting to ₹6.70 or 1.07%, comes in the wake of an unsatisfactory quarterly update, which highlighted a mid-single-digit revenue decrease for the July-September period. Investors and analysts are now intently observing the company’s trajectory, offering insights into its potential performance in the coming weeks.
The latest earnings report from Dabur has revealed significant challenges currently facing the company. Revenue decline is attributed to multiple factors, such as a correction in distribution inventory and unusual weather patterns that have negatively impacted consumer behavior. Specifically, heavy rains and floods have disrupted the out-of-home consumption and beverage segments, leading forecasts of a mid to high-teens drop in operating margins for the quarter.
Management had initially expected an improvement in growth rates; however, the results disappointed stakeholders, prompting varied responses from analysts:
- Morgan Stanley has held an Equal-Weight rating with a target price set at ₹772, showing some level of optimism amidst the downturn.
- Investec takes a more conservative approach, maintaining a Hold rating and a target price of ₹368, raising concerns regarding the company’s revenue performance.
- Nuvama has issued a Neutral rating with a target price of ₹760, suggesting potential for recovery despite existing challenges.
The market’s response to Dabur’s quarterly earnings has been immediate and impactful. The stock price has undergone notable fluctuations recently, with a dip of approximately 4% over the past month. In a broader context, while Dabur’s shares have gained around 6% over the last three months, these gains are significantly outpaced by the current negative trends.
As investors look to the future, several key levels in Dabur’s share price will be crucial:
- Support Level: The immediate support level is seen around ₹600. A drop below this level may trigger further declines.
- Resistance Level: A resistance level is currently identified at ₹650. A breakthrough above this threshold could suggest a potential recovery for the stock.
Analysts indicate that if Dabur can successfully stabilize its operations and enhance its sales outlook, opportunities for share price recovery may arise. However, ongoing assessments of external factors—such as weather patterns and shifts in consumer behavior—will remain critical as they navigate these challenges.
Looking towards the third quarter of FY25, some analysts express cautious optimism. They believe that necessary adjustments in channel inventory combined with seasonal demand could positively influence Dabur’s performance. Notably, the company’s international business segment is projected to experience double-digit growth in constant currency terms, potentially offsetting some of the domestic challenges faced.
