Earlier this week, Dabur India Ltd announced a ₹60 crore investment for a minority stake in luxury ‘farm-to-face’ skincare brand RAS Beauty, which has already received investments from Unilever and Amazon. True, a ₹60 crore minority investment will barely move the needle for Dabur’s ₹12,500 crore FY25 consolidated revenue.
The 4% drop in Dabur’s shares since the announcement reflects this scepticism. But the context is attractive.
The RAS stake-acquisition is Dabur’s first bet with its ₹500 crore war chest under Dabur Ventures, announced on 30 October to back high-growth, digital-first D2C businesses. The stock has held up better since then, falling 2% versus the 12% drop in the Nifty FMCG index.
For decades, Dabur had been the archetype of a steady FMCG compounder—reliable Ayurveda-focused brands, predictable cash flows and low debt. But in recent years, stiff competition in the natural/herbal space and sluggish domestic demand have left Dabur’s growth at the mercy of its international business, which contributes 25% of its revenue.
As discovery increasingly happens on social media and purchases are routed through digital marketplaces, investing early in brands such as RAS gives Dabur a window into the high-growth consumer trends without having to build those capabilities from scratch. RAS has grown rapidly online, clocking roughly 75% revenue CAGR over the past three years to an annualized run-rate of about ₹100 crore.
Limited downside
“Marico, ITC, HUL, Tata Consumer generally acquire a controlling stake in D2C startups versus Dabur’s minority stake acquisition in RAS Beauty,” reckons Nuvama Institutional Equities. Dabur’s minority-stake approach carries lower risk. If the brand scales up, Dabur can double down and integrate it into its distribution muscle. Otherwise, the financial downside remains limited.
Whether this strategy delivers meaningful growth is an open question. But a credible narrative of reinvention has supported sentiment.
That said, Dabur derives 6% of its consolidated revenue from the Middle East and could also face margin pressure as raw material prices rise amid the Iran war. Dabur’s premium valuation at 40.5x P/E, based on consensus FY27 Bloomberg estimates, can also give investors pause.