Shares of Dabur India Ltd. rallied as much as 4% to ₹393 on Tuesday, following the company's positive business update for Q2 FY27. According to The Economic Times, the stock was trading at the day's high after the company announced that its India FMCG business is expected to accelerate to double-digit growth in Q2 FY27, marking its 'strongest performance in recent quarters'. The positive market reaction comes after the company announced that its India FMCG business is expected to accelerate to double-digit growth in Q2 FY27, marking its 'strongest performance in recent quarters'. The stock has been an underperformer this year, registering its 52-week low at ₹368 on September 9, 2026, and currently trades with a 22.8% year-to-date loss. As per The Economic Times, the scrip has advanced 2% in the past week and over the month, though it remains down nearly 23% on a year-to-date basis.
Brokerages remain divided on Dabur's growth trajectory despite the company's positive Q2 outlook. Nomura maintains its 'Buy' rating with a target price of ₹625, highlighting that double-digit growth has sustained and expecting the recent recovery to gather pace. The brokerage expects EBITDA margin to moderate marginally year-on-year but sees the underlying business trajectory improving sequentially, with focus shifting towards whether recent improvement can sustain as Dabur moves into coming quarters. Goldman Sachs maintains its 'Neutral' rating with a target price of ₹485, acknowledging improved performance driven by Dabur's India business but focusing on the quality of improvement and contribution from new channels. The differing ratings put focus on whether improved operating momentum can translate into sustained earnings recovery, with Nomura more constructive on the trajectory while Goldman Sachs remains more measured despite better Q2 performance.
In its second quarter business update shared with the exchanges, Dabur said that its FMCG business will mark its 'strongest performance in recent quarters'. As reported by The Economic Times, the company expects consolidated revenue growth in double-digits for the September quarter, though operating margins will be impacted by inflationary pressures during the quarter. Despite these margin pressures, Dabur's profit after tax (PAT) will continue to grow at a double-digit level, according to the company's exchange filing. The company noted that demand conditions remained steady during the quarter despite a volatile operating environment marked by renewed geopolitical tensions in the Middle East, persistent inflationary pressures across various commodities and deficit rainfall. According to the regulatory filing, Dabur remains optimistic for further acceleration in consumption, supported by the upcoming festive season, while continuing to monitor the evolving geopolitical and inflationary environment. The growth recovery is not coming without cost pressures, with inflation remaining elevated particularly in HPC and OTC & Ethicals businesses, weighing on operating margins, though calibrated price increases and cost-saving initiatives partly offset the pressure.
Within Dabur's various business segments, the home and personal care (HPC) segment is expected to record double-digit growth, with hair oils and shampoos expected to deliver high-teens growth, led by robust performance in both perfumed and coconut hair oils, reflective of healthy consumer demand. This marks the fourth consecutive quarter of double-digit growth for the hair care segment. According to The Economic Times, home care is expected to register high-single-digit growth, skin care may grow in double-digits, while oral care may grow in mid-single-digits on a high base, led by continued investment and franchise strength. The healthcare segment is estimated to register record mid-single-digit growth, with OTC & Ethicals estimated to register sequential recovery with early-teens growth, while digestives are expected to post high-teens growth. The Food and Beverage business is expected to record mid-teens growth, with the Foods segment estimated to continue its robust growth momentum with strong double-digit growth. Food and beverages is the only segment where revenue growth rate is likely to be substantially higher than Q1 growth rate of 7.2%, driven by a wider range of packaging formats across different price points and a less intense monsoon.
The international business for Dabur is expected to grow in high-teens in rupee terms, despite severe headwinds in the Middle East. As reported by The Economic Times, Egypt, Turkey, the US, Bangladesh and the UK each recorded strong double-digit growth in INR terms during Q2 FY27. Emerging channels such as e-commerce and quick commerce are also likely to report strong growth momentum during the quarter for Dabur led by the continued investments made by the company and its Omnichannel distribution approach. Modern trade for Dabur also continues to grow in double-digits with general trade growing across rural and urban markets with rural continuing to outpace urban led by Project Saksham. The Beverages portfolio registered a sequential recovery and is likely to grow in the early teens, driven by expanded offerings across formats and price points and a favourable season. International revenue growth in Q1 was 15.5% year-on-year, leaving limited scope for positive surprise, and investors should track constant currency growth, especially in the US and UK, as the Indian rupee has depreciated nearly 10% year-on-year against the USD and GBP.
Margin matters will be crucial for investor confidence in Dabur's Q2 performance. Nuvama Institutional Equities estimates Dabur's consolidated Q2FY27 gross and EBITDA margins to drop year-on-year and quarter-on-quarter to 46% and 17.8% respectively. A positive margin surprise could boost investor confidence significantly. Dabur derives 70% of its revenues from the domestic market and the rest from international. The stock price peaked in September 2024 at ₹672 and has lost nearly 43% over the last two years, reflecting a sharp de-rating in valuation multiples. Based on HDFC Securities and Nuvama's FY27 estimates, the Dabur stock trades at a price-to-earnings multiple of 32. While valuations are attractive versus historical multiples, this alone might not be tempting for investors in view of the likely domestic volume growth of 5-6% in H1FY27. So, Dabur needs to demonstrate a pickup in volume growth or an improvement in profitability—factors that can act as a significant trigger for the stock.
