As per the regulatory filing last week, Dabur’s board of directors approved an interim dividend of ₹2.5 per equity share having a face value of Re 1 each (250%) for the fiscal FY23. The record date for the dividend is fixed on November 4, 2022.
The company plans to pay the dividend from November 17 onwards to the beneficial owners.
How to understand you’re eligible for dividend benefits?
The proposed record date is usually to determine eligible shareholders for the dividend benefit. The shareholders whose names appear in the list at the end of the record date (November 4) will receive the announced dividend.
It needs to be noted that to be eligible for receiving dividends, a shareholder must have that respective stock in their Demat account. Generally, it takes one to two days for a stock to get credited to the Demat account, that because of the settlement option.
Dabur has a settlement option of ‘T+2’. Hence, it takes two days for this stock to appear in your Demat account.
As per the guidelines, the last date to buy shares in order to be eligible to receive a dividend would be two days before the record date, and one day before the ex-dividend date. This is called cum dividend date. On the ex-dividend date, the price of the equity share of the company gets adjusted for the dividend payout.
Ex-dividend date is usually one working day prior to the record date. Hence, Dabur shares will turn ex-dividend on November 3.
On BSE, Dabur shares ended at ₹562.05 apiece marginally down on Wednesday. The company’s market cap is around ₹99,581.97 crore. On the previous day, the shares were around ₹563.70 apiece.
Dabur shares have jumped by nearly 6% from October 25 to date. The company announced its financial performance on a market holiday on October 26.
Should you buy the shares?
In the second quarter of FY23, Dabur posted a consolidated net profit of ₹490.06 crore to owners compared to ₹504.35 crore in Q2FY22. Sequentially, Q2 PAT climbed from ₹440.32 crore in Q1FY23. Revenue from operations however rose to ₹2,986.49 crore from ₹2,817.58 crore in Q2FY22 and ₹2,822.43 crore in Q1FY23.
In their Q2 review report, ICICI Securities analysts said, “Dabur’s print (+7% YoY India, +12% YoY on 3-year CAGR basis) was on expected lines with Foods and Beverages managing the show well. While Healthcare performance appears unexciting (lapping a high base), the HPC category did reasonably well. That said, the performance was decent on an overall basis.
The analysts highlighted two key points of the quarter. Firstly, Dabur has announced the acquisition of Badshah Masala; after beverages, the intent is to scale Foods to ₹5 billion in three years (including spices). The analysts believe that increased business complexity is a key risk. The opportunity to invest in its power brands is large.
Secondly, it has highlighted rural growth lagging urban (due to inflationary impact) for the first time in five quarters (the (FMCG) pack was already witnessing this trend). Dabur is looking at all spaces and adjacencies in the segments it operates – drive growth in multiple sub-categories apart from maintaining dominance in core categories.
According to ICICI Securities analysts note, “We stay longstanding believers in Mohit Malhotra-led reimagining of Dabur. We like the (1) continued thrust on innovation, agility, and culture change, (2) utilisation of e-commerce platform to drive new product development (premiumisation), and (3) distribution expansion and increased investment behind power brands to drive growth. Maintain BUY with a DCF-based TP Rs670.”
Also, ICICI Direct analysts report said, “Acquisition of Badshah Masala is entry into large ₹25,000 crore spices & seasoning category. DIL continues to foray in multiple foods categories to increase the addressable market for long term sustainable growth.”
ICICI Direct’s note further said, “We maintain our BUY rating on the stock,” adding, “we value the stock at ₹700 ascribing 55x FY24 earnings multiple.”
On the other hand, Prabhudas Lilladher’s analysts report said, “We change our EPS estimates by -3.5%/-0.1%/0.1% factoring in adverse RM inflation in FY23 & impact of Badshah Masala acquisition. Dabur had flattish volume growth in 2Q (3-year CAGR 8.7%) with market share gains across 95% of portfolio. We expect sequential gross margin improvement from 3Q23 given lower inflation & calibrated price hikes.”
They further added, “Rural continues to remain impacted by higher product prices and has lagged Urban markets after 5 quarters. Normal monsoons, good harvest & increase in MSP will drive demand in rural in near/medium term.”
Long-term outlook on Dabur remains intact. Prabhudas report highlighted the following factor for the long-term outlook, “1) Innovation led growth strategy with focus on 8 core brands 2) Increasing share in Foods & Beverages & Hair care category 3) LUP Innovations allowing DABUR to leverage its distribution 4) Strong rural distribution coverage of 100k+ villages in 1HFY23 5) Entry into Rs250bn branded spices category with Badshah Masala acquisition and 6) 4-5% incremental sales/year from e-com innovations.”
“Dabur trades at 38.0x Sept24 EPS with 14.9% EPS CAGR over FY22-25, 23% ROE, and 50% dividend payout. Retain accumulate with 12 month DCF based target price of ₹615 ( ₹604 earlier),” Prabhudas report added.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.