InvestorQ : Dabur has reported a sharp fall in profits. Is it time for me to get out of the stock immediately?
sara Kunju made post

Dabur has reported a sharp fall in profits. Is it time for me to get out of the stock immediately?

Answer
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1 year ago


How the results of Dabur panned out?

For the March quarter Dabur reported a 6.5% fall in profits to Rs.370 crore. However, this was largely due to an Rs.75 crore goodwill write off that the company had to take for its Turkey business. If that is excluded, then the normal growth momentum has been maintained by the company so there is really not much of fundamental issue to worry about. However, higher input cost and higher market costs meant that the EBITDA margins compressed by 240 bps to 21%, which is among the lowest in the FMCG sector.

Should you look to sell Dabur at current prices?

The stock is quoting near to its lows and the company looks poised to benefit from the rapid rise in rural and urban spending. At 56X P/E ratio the stock is offering par valuations in the FMCG space. However, we do feel that the downside risks at this price are fairly limited and hence it may not be the right time to sell the stock. While we don’t recommend any aggressive accumulation at current levels, the risk reward ratio is favourable for a holder.