Current Rating and Its Implications
MarketsMOJO’s 'Sell' rating on Dabur India Ltd. indicates a cautious stance towards the stock, suggesting that investors may want to consider reducing exposure or avoiding new purchases at this time. This recommendation is based on a comprehensive evaluation of four key parameters: Quality, Valuation, Financial Trend, and Technicals. Each of these factors contributes to the overall assessment of the stock’s potential risk and reward profile in the current market environment.
Quality Assessment
As of 25 December 2025, Dabur India Ltd. maintains a good quality grade. The company has demonstrated steady, albeit modest, growth in net sales and operating profit over the past five years. Specifically, net sales have grown at an annualised rate of 7.96%, while operating profit has increased by 3.58% annually. These figures suggest a stable business model with consistent revenue generation, though the pace of growth is relatively subdued compared to high-growth peers in the FMCG sector.
Return on Capital Employed (ROCE) for the half-year ended September 2025 stands at 20.09%, which is the lowest in recent periods, signalling some pressure on capital efficiency. Meanwhile, the Return on Equity (ROE) remains respectable at 16.5%, reflecting reasonable profitability for shareholders. Despite these positive aspects, the company’s growth trajectory is not robust enough to offset other concerns.
Valuation Considerations
Valuation is a critical factor in the current rating. Dabur India Ltd. is classified as expensive with a Price to Book Value ratio of 7.9. This elevated valuation suggests that the market has priced in significant growth expectations. However, the latest data shows that the company’s profit growth has been flat, with only a 1.1% increase over the past year, which does not fully justify the premium valuation.
The Price/Earnings to Growth (PEG) ratio is notably high at 46.1, indicating that the stock’s price far exceeds its earnings growth potential. This disparity raises concerns about the sustainability of current valuations, especially given the company’s modest financial trend and recent flat results.
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- - Fundamental Analysis
- - Technical Signals
- - Peer Comparison
Financial Trend Analysis
The financial trend for Dabur India Ltd. is currently flat. The company’s recent quarterly results for September 2025 showed no significant growth, reinforcing the view of stagnation. Over the last year, the stock has delivered a return of -3.71%, underperforming the broader BSE500 benchmark consistently over the past three years.
While the stock has managed a modest 3.34% gain over the past six months, this short-term improvement has not translated into sustained momentum. The company’s long-term growth rates in sales and operating profit remain subdued, which limits the upside potential for investors seeking capital appreciation.
Technical Outlook
From a technical perspective, Dabur India Ltd. is rated as mildly bearish. The stock’s price has declined by 0.43% on the day of analysis and has shown negative returns over one week (-0.58%), one month (-4.18%), and three months (-5.18%). These trends indicate a lack of strong buying interest and suggest that the stock may face resistance in breaking higher levels in the near term.
The mildly bearish technical grade aligns with the valuation concerns and flat financial trend, reinforcing the cautious stance reflected in the 'Sell' rating. Investors should be mindful of these signals when considering their portfolio allocations.
Performance Relative to Peers and Benchmark
Dabur India Ltd. has consistently underperformed its benchmark, the BSE500, over the last three years. Despite being a midcap player in the FMCG sector, the stock’s returns have lagged behind peers, with a year-to-date return of -3.32%. This underperformance, combined with expensive valuation and flat financial growth, contributes to the overall negative outlook.
Investors looking for exposure to the FMCG sector may find better opportunities in companies with stronger growth prospects, more attractive valuations, and positive technical momentum.
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What This Rating Means for Investors
The 'Sell' rating on Dabur India Ltd. serves as a signal for investors to exercise caution. It suggests that the stock currently does not offer an attractive risk-reward balance given its expensive valuation, flat financial performance, and subdued technical indicators. Investors may want to reassess their holdings in the stock, particularly if they are seeking capital appreciation or income growth.
For those considering new investments, the current rating advises looking elsewhere for opportunities with stronger fundamentals and better growth prospects. However, long-term investors with a high risk tolerance and belief in the company’s strategic initiatives may choose to monitor the stock closely for any signs of turnaround or valuation correction.
Summary
In summary, Dabur India Ltd. is rated 'Sell' by MarketsMOJO as of the rating update on 03 Dec 2025. The current analysis as of 25 December 2025 highlights a company with good quality but expensive valuation, flat financial trends, and mildly bearish technical signals. The stock’s recent underperformance relative to its benchmark and peers further supports the cautious outlook. Investors should carefully weigh these factors when making portfolio decisions involving Dabur India Ltd.
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