Dabur gains after ICRA reaffirms credit rating

Dabur India rose 1.36% to Rs 518 after the credit ratings agency ICRA reaffirmed its rating on the company's non-convertible debenture programme worth Rs 15 crore at '[ICRA] AAA (Stable)'.

ICRA said that the rating reaffirmation takes into account Dabur India's healthy operating and financial performance, as reflected in its steady volume growth, robust cash flows, and strong balance sheet and liquidity position.

The rating continues to derive strength from Dabur's position as one of the leading companies in the domestic fast-moving consumer goods (FMCG) segment, its well-established brands in the ayurvedic/herbal category, significant market share for most of its products, and its diversified product portfolio.

 

The rating also continues to take comfort from Dabur's strong balance sheet with negative net debt position (total debt is less than cash and liquid investments) and strong credit metrics.

These strengths, however, are partly offset by the intense competition in the FMCG sector and a challenging macroeconomic environment.

The 'stable' outlook on the long-term rating reflects ICRA's belief that Dabur's cash flows from operations will remain robust which, along with its strong balance sheet, will support its credit metrics.

ICRA further said that the rating could be downgraded if any large capital expenditure or acquisition leads to considerable and sustainable weakening in the credit metrics or if there is any major reduction in market share of key product segments impacting its accruals for a prolonged period.

Dabur India operates in various product categories, such as hair care, oral care, healthcare, skin care, home care and foods. Its business units include consumer care business, foods business and international business.

On a consolidated basis, the company reported a 23.72% jump in net profit to Rs 492.02 crore on a 16% rise in revenue from operations to Rs 2,728.84 crore in Q3 FY21 over Q3 FY20.

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