Dabur dips 5% after Goldman Sachs downgrades stock to sell

Goldman Sachs downgraded the ratings citing high exposure to the rural sector, and core categories facing competitive intensity

Dabur India stocks slid 5 per cent to Rs 382 in morning deals on the BSE on Tuesday after global brokerage firm Goldman Sachs downgraded the stock to 'sell' from ‘neutral’.

The brokerage firm lowered the target price to Rs 334 from Rs 375 citing high exposure of Dabur India to the rural sector, and core categories -- juices, hair oil and oral care -- facing competitive intensity.

In the past one month, the stock had outperformed the market by surging 8 per cent, as compared to 2.7 per cent rise in the S&P BSE Sensex till Monday.

Analysts at Anand Rathi Share and Stock Brokers believe the company’s near-term revenue growth will be impacted by the slowdown in rural demand and in the international business (recovery expected in Q2 FY20).

The Management, however, expects rural demand to recover and drive double-digit revenue growth ahead, backed by high single-digit volume growth and a 2-3 per cent price hike due to rising costs. It expects premiumisation and its LUP strategies to aid in retaining margins ahead.

At 10:40 am, Dabur India was trading 3 per cent lower at Rs 387 on the BSE, as compared to 0.28 per cent rise in the S&P BSE Sensex. The trading volumes on the counter nearly doubled with a combined 2.3 million shares changed hands on the NSE and BSE so far.