DABUR - Investment Analysis: Buy Signal or Bull Trap?
Last Updated Time : 20 Dec 25, 07:05 am
Back to Investment ListInvestment Rating: 3.4
| Stock Code | DABUR | Market Cap | 87,674 Cr. | Current Price | 494 ₹ | High / Low | 577 ₹ |
| Stock P/E | 61.5 | Book Value | 41.0 ₹ | Dividend Yield | 1.62 % | ROCE | 24.6 % |
| ROE | 19.6 % | Face Value | 1.00 ₹ | DMA 50 | 508 ₹ | DMA 200 | 512 ₹ |
| Chg in FII Hold | -0.97 % | Chg in DII Hold | 1.13 % | PAT Qtr | 349 Cr. | PAT Prev Qtr | 407 Cr. |
| RSI | 33.8 | MACD | -5.02 | Volume | 6,93,206 | Avg Vol 1Wk | 9,55,906 |
| Low price | 420 ₹ | High price | 577 ₹ | PEG Ratio | -90.5 | Debt to equity | 0.07 |
| 52w Index | 47.3 % | Qtr Profit Var | 5.91 % | EPS | 8.04 ₹ | Industry PE | 49.7 |
📊 Analysis: DABUR shows strong fundamentals with ROE at 19.6% and ROCE at 24.6%, both supportive of long-term compounding. Debt-to-equity at 0.07 reflects a healthy balance sheet, and dividend yield at 1.62% adds shareholder value. However, valuation is stretched with P/E at 61.5 compared to industry average of 49.7, and PEG ratio (-90.5) highlights weak growth-adjusted valuation. EPS at 8.04 ₹ is modest relative to market cap. Technicals show RSI at 33.8 (oversold), MACD negative (-5.02), and price below both 50 DMA (508 ₹) and 200 DMA (512 ₹), indicating bearish momentum. Quarterly PAT declined from 407 Cr. to 349 Cr., showing near-term weakness.
💡 Entry Zone: Ideal entry would be in the 440–470 ₹ range, closer to valuation comfort and support levels. Current price (494 ₹) is slightly above fair entry zone, making patience advisable for better risk-reward.
📈 Exit Strategy: If already holding, maintain positions for medium-term (18–24 months) given strong ROE/ROCE and dividend yield. Consider partial exit near 540–560 ₹ resistance if earnings growth does not improve. Long-term holding is viable only if profit trajectory stabilizes and PEG ratio turns positive.
Positive
- 📌 Strong ROE (19.6%) and ROCE (24.6%) support compounding potential
- 📌 Debt-to-equity at 0.07 indicates financial stability
- 📌 Dividend yield of 1.62% provides shareholder returns
- 📌 Oversold RSI (33.8) may offer near-term recovery opportunity
Limitation
- ⚠️ Valuation premium: P/E 61.5 vs industry 49.7
- ⚠️ Negative PEG (-90.5) highlights poor growth outlook
- ⚠️ EPS at 8.04 ₹ is modest relative to market cap
- ⚠️ Price below DMA levels indicates bearish trend
Company Negative News
- ❌ Quarterly PAT decline from 407 Cr. to 349 Cr.
- ❌ FII holding decreased (-0.97%)
Company Positive News
- ✅ DII holding increased (+1.13%)
- ✅ Strong balance sheet with minimal debt
Industry
- 🏦 Industry PE at 49.7, sector moderately valued
- 🏦 FMCG sector remains resilient with steady demand but faces margin pressures
Conclusion
🔎 DABUR is moderately attractive for medium-term investment with strong ROE/ROCE and low debt. Entry near 440–470 ₹ offers margin of safety. Existing holders can maintain positions for 18–24 months, targeting exits near 540–560 ₹ unless earnings growth improves. Long-term compounding potential is limited unless profit trajectory strengthens and PEG ratio turns positive.
Would you like me to extend this into a peer benchmarking overlay comparing DABUR against FMCG peers like HUL, Marico, and Nestlé India to highlight relative valuation comfort zones?
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