On Thursday, CLSA adjusted its price target for Dabur India Ltd. (DABUR:IN), reducing it to INR582.00 from a previous INR590.00 while maintaining a Hold rating on the stock. The adjustment follows a reported second-quarter fiscal year 2025 sales decline of 5.5% year-over-year, which fell short of both CLSA's and consensus estimates by 13% and 8%, respectively. The decrease in sales was attributed to a rationalization of distributor inventory.
The company's earnings before interest, taxes, depreciation, and amortization (EBITDA) also underperformed expectations, coming in 21% below CLSA's forecast and 18% below the consensus estimates. The shortfall was largely due to a combination of deleverage and consistent advertising and promotion (A&P) spending, despite the lower sales figures.
In response to these results, CLSA has revised its earnings estimates for Dabur India for the fiscal years 2025 to 2027, reducing them by 7%-8%. The revisions reflect the slower-than-expected growth and reduced profitability observed in the second quarter. The firm has also updated its valuation model to a September 2026 calendar year-end, which contributed to the new target price of INR582.00.
Despite the reduction in the target price and earnings estimates, CLSA has chosen to maintain its Hold rating on Dabur India. The analyst's commentary noted the company's guidance for mid-high single-digit volume growth in the second half of the year but also acknowledged the challenges faced in the second quarter.
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