Kotak Institutional Equities has upgraded Dabur India's rating to 'Add' from 'Reduce' following a significant stock correction. According to the brokerage report, the upgrade is primarily driven by reasonable valuations after the stock's 25% correction over the past four months. The company's fair value has been set at ₹430 per share, down from the previous target of ₹465 at 35X PE multiple. As reported by Kotak, the stock closed marginally lower at ₹384 per share on BSE with a market capitalisation of ₹67,942.55 crore on Wednesday, September 16. The upgrade comes as NSE CEO reports unexpectedly large demand for Dabur India's IPO, indicating strong investor interest in the offering.
Dabur India has demonstrated remarkable financial recovery with revenue from operations increasing by ₹7,531.00 million (47.13%) to ₹23,510.31 million in Fiscal 2026 from ₹15,979.31 million in Fiscal 2025. The company's profit after tax surged by 48.72% from ₹398.61 million in Fiscal 2025 to ₹592.82 million in Fiscal 2026. Kotak Institutional Equities expects Dabur India's operating performance to improve to 9-10% revenue and EPS growth in financial year 2026-27, likely aided by a soft base and better execution under new India CEO, Herjit Bhalla. The company's return on equity (ROE) stands at 21.26%, indicating strong operational efficiency despite recent challenges.
Dabur India has launched its Initial Public Offering (IPO) of 1,24,26,638 shares priced in a band of ₹403-424 per equity share, with an aggregate size of ₹500.79-526.89 crore. The IPO opened for subscription on September 16, 2026, and will close on September 18, 2026, with shares listed on both BSE and NSE. The stock has experienced significant volatility, declining 23.4% in 2026 so far and around 28.44% in one year. During Wednesday's trading session, Dabur India shares touched an intraday high of ₹389.55 per share and an intraday low of ₹383 per share. The strong IPO demand reflects positive market sentiment toward the company's transformation strategy.
To further improve its inventory procurement model and reduce operating costs, Dabur India intends to enter into tie-ups with brands with whom it currently does not have a direct relationship. Such direct arrangements will enable the company to eliminate intermediaries in the supply chain, reduce associated costs, and procure mobile phones, accessories and other electronic items at more competitive prices. This strategic initiative represents a significant operational improvement that could enhance the company's cost structure and competitive positioning in the market.
Despite the positive rating upgrade, Kotak Institutional Equities acknowledges significant concentration risks in Dabur India's business model. The company derives 89.09% of its revenue from operations from Maharashtra during Fiscal 2026, with 458 stores out of 503 total stores located in Maharashtra, constituting 91.05% of its total store network. Additionally, COFO and FOFO models cumulatively contributed 74.19% of revenue in Fiscal 2026, creating dependency on franchisee-led operations. These concentration risks, while contributing to the company's current success, could pose challenges if political, social, or economic conditions in Maharashtra change adversely or if the franchisee models face operational challenges.
