Dabur India is the fourth largest FMCG company in India positioned on the ’health and wellness’ platform.
After gaining a strong presence in its core segments like hair oil and health supplements, DIL has successfully added new businesses like foods, oral care (toothpaste), international business and shampoos over the past five years.
It has also demonstrated its ability to make and integrate smart acquisitions (Balsara) that complement its product portfolio.
The company plans to invest ~Rs2.5 billion over the next two years. Besides a ~Rs1.2 billion brownfield expansion in FY09, DIL also plans to set up ~Rs1.5bn greenfield plant in FY10 in the tax free zone, which will enable it to take advantage of MAT till 2020.
To combat the rising input cost pressure and maintain operating margin, DIL has planned a 7% price hike in the consumer care division and 8-10% in the consumer health division (no hike in the foods business) for FY09.
We recommend a BUY with a price target of Rs98.