Dabur climbs 3% after Q2 results. Here's what analysts say ahead of concall

Shares of Dabur India climbed 3 per cent in Thursday's trade ahead of the management concall scheduled for 11 am later today.

The FMCG firm's September quarter results were largely in line with analyst estimates but analysts believe an inflationary trend in raw material costs could hurt margin profile for the company in the near term.

Nuvama Institutional Equities said it would like to seek answers to four questions. They include a query on how long does the management see the rural slowdown would last and what categories are seeing stronger recovery trends.

Nuvama said it would also seek clarity on the total basket inflation and the price hike taken so far.

How the new launches have performed, what are the company's plans for the new acquisition Badshah Masala and the reasons behind buying the business are some other questions Nuvama would seek answers to.

Ahead of the concall, the scrip rose 3 per cent to hit a high of Rs 548.10 on BSE.

Dabur India had on Wednesday reported a 2.8 per cent year-on-year (YoY) drop in net profit at Rs 490.10 crore for the September quarter compared with Rs 504.40 crore in the same quarter last year.

Revenue from operations for the quarter rose 6 per cent YoY to Rs 2,986.50 crore from Rs 2,817.60 crore in the corresponding quarter last year. Ebitda margin for the quarter fell to 24.2 per cent from 26 per cent in the year-ago quarter.

Motilal Oswal in a note said Dabur's performance was in line with estimates. It said lower ad spends offset gross margin pressure.

Dabur India in a separate release also announced acquiring a 51 per cent stake in Badshah Masala for Rs 587.52 crore, at an enterprise value of Rs 1,152 crore. "This translates to a revenue multiple of around 4.5 times and Ebitda multiple of around 19.6 times of FY2022-23 estimated financials," it said.

"Through this acquisition Dabur enters into the Rs 25,000 crore spices and seasoning market in India and this will also aid in Dabur’s strategic intent to expand its foods business," Motilal Oswal said in a note.

Motilal Oswal added that the transaction is expected to be cash EPS neutral in the first year and accretive thereafter.

Also read: Dabur’s got its Badshah on-board: Acquires majority stake in the prominent masala brand