DABUR - Investment Analysis: Buy Signal or Bull Trap?
Back to ListInvestment Rating: 3.8
| Stock Code | DABUR | Market Cap | 88,516 Cr. | Current Price | 499 ₹ | High / Low | 577 ₹ |
| Stock P/E | 60.7 | Book Value | 41.0 ₹ | Dividend Yield | 1.61 % | ROCE | 24.6 % |
| ROE | 19.6 % | Face Value | 1.00 ₹ | DMA 50 | 509 ₹ | DMA 200 | 511 ₹ |
| Chg in FII Hold | -0.83 % | Chg in DII Hold | 1.00 % | PAT Qtr | 451 Cr. | PAT Prev Qtr | 349 Cr. |
| RSI | 42.4 | MACD | -1.82 | Volume | 12,52,282 | Avg Vol 1Wk | 20,01,245 |
| Low price | 420 ₹ | High price | 577 ₹ | PEG Ratio | -89.3 | Debt to equity | 0.07 |
| 52w Index | 50.3 % | Qtr Profit Var | 7.93 % | EPS | 8.15 ₹ | Industry PE | 46.7 |
📊 Analysis: Dabur shows strong fundamentals with ROE at 19.6% and ROCE at 24.6%, reflecting efficient capital usage. Debt-to-equity is low at 0.07, ensuring financial stability. Dividend yield of 1.61% provides steady income support. EPS of 8.15 ₹ and quarterly PAT growth (451 Cr. vs 349 Cr., +7.93%) highlight earnings strength. However, the stock trades at a high P/E of 60.7 compared to industry average of 46.7, suggesting premium valuation. PEG ratio is negative (-89.3), indicating weak growth prospects relative to valuation. Technicals show neutral momentum with RSI at 42.4 and MACD negative (-1.82).
💰 Ideal Entry Zone: Considering DMA levels (50 DMA at 509 ₹, 200 DMA at 511 ₹) and support near 420 ₹, the ideal long-term entry zone is 470–490 ₹. Current price (499 ₹) is slightly above comfort zone, so staggered entry is advisable.
📈 Exit / Holding Strategy: For existing holders, Dabur is a good candidate for long-term compounding (3–5 years) given strong ROE/ROCE and low debt. Exit strategy: consider partial profit booking near 570–580 ₹ resistance zone. Long-term investors can continue holding as long as ROE remains above 18% and earnings growth sustains.
Positive
- ✅ Strong ROE (19.6%) and ROCE (24.6%).
- ✅ Low debt-to-equity (0.07) ensures financial safety.
- ✅ Dividend yield of 1.61% supports income investors.
- ✅ Quarterly PAT growth (+7.93%) shows earnings momentum.
- ✅ DII holdings increased (+1.00%), reflecting domestic support.
Limitation
- ⚠️ High P/E (60.7) compared to industry average (46.7).
- ⚠️ Negative PEG ratio (-89.3) indicates weak growth prospects.
- ⚠️ EPS (8.15 ₹) is modest relative to valuation.
Company Negative News
- 📉 FII holdings decreased (-0.83%), showing reduced foreign confidence.
- 📉 MACD negative (-1.82), indicating weak short-term momentum.
Company Positive News
- 📈 PAT improved from 349 Cr. to 451 Cr.
- 📈 EPS remains stable at 8.15 ₹.
- 📈 DII holdings increased (+1.00%).
Industry
- 🏦 Industry P/E at 46.7 highlights Dabur trades at a premium.
- 🏦 FMCG sector has strong long-term demand potential driven by consumer staples and healthcare products.
Conclusion
🔎 Dabur is a fundamentally strong FMCG company with efficient capital usage, low debt, and steady dividends. While valuations are stretched, its long-term compounding potential makes it a good candidate for investors seeking stability and growth. Ideal entry zone is 470–490 ₹, with a holding horizon of 3–5 years. Exit near 570–580 ₹ if valuations become excessive without earnings catch-up.