500% jump in 10 years: Buy this large-cap blue-chip FMCG stock and gain 20% in FY19

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Published: April 3, 2018 12:48:54 PM

The benchmark Sensex had risen about 110% in the last 10 years to 33,255.36 from a level of 15,832.55. We bring to you a large-cap blue-chip FMCG stock which has gained more than 500% in last 10 years to buy and earn up to 20% in the financial year 2018-2019.

The stock of Dabur India Ltd has advanced as much as 544% to Rs 335.9 from a share price level of Rs 52.1. (Image: Reuters)

Indian stock markets have posted a nominal rise in the financial year 2017-2018 with Sensex and Nifty surging 10-11% in the same period under review due to pessimism outburst in the last two months (February and March) on the back of LTCG tax, global sell-off and India’s biggest bank scam unearthing at nation’s second-largest PSU lender PNB. In the last 10 years, Indian equities have fared much better as compared to regional Asian stocks with Sensex and Nifty doubling the investors’ money. The benchmark Sensex had risen about 110% in the last 10 years to 33,255.36 from a level of 15,832.55 with some blue-chip shares outperforming the index even.

We bring to you a large-cap blue-chip FMCG stock which has gained more than 500% in last 10 years to buy and earn 20% in the financial year 2018-2019.

Shares of Ghaziabad-based ayurvedic and consumer product manufacturer Dabur India Ltd have gone berserk in the last 10 years returning more than 500%. The stock of Dabur India Ltd has advanced as much as 544% to Rs 335.9 from a share price level of Rs 52.1 (3 April 2008) in the 10-year span on NSE. The research and brokerage firm HDFC Securities has given a buy rating with a target price of Rs 401 which implies a potential upside of 19.38% from the current market price of Rs 335.9.

“We expect Revenue/EBITDA/PAT CAGR of 14/20/22% respectively over FY18E-20E. With domestic and international recovery at inflexion point, we see further re-rating in the stock. We value Dabur based on P/E of 35x FY20EPS and arrive at TP of Rs 401. We recommend investors’ to Buy the stock at CMP and add on dips to Rs 302 with a TP of Rs 401,” HDFC  Securities said in a research report.

“Dabur has witnessed many challenges in its business during the last two year, on account of slow rural demand (~45% of domestic), disruption owing to Patanjali, greater impact of demonetisation than other peers owing to high wholesale dependence and weal international business. As a result, Dabur’s consolidated revenue declined average ~2% during eight quarters. Better revenue growth, stable inflation and a favourable product mix would expand the EBITDA margin by ~200bps over FY18E-20E,” HDFC Securities added.

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