Should You Exit Dabur’s 200 Shares for ITC? An Analysis for Long-Term Investors

In the current market environment, making the right investment decisions can be a complex task. This article delves into the merits of holding onto your 200 shares of Dabur, purchased at 445, or potentially diverting your investment towards ITC. Given the fundamental strength of both stocks and the broader market trends, we will explore whether switching from Dabur to ITC will be advantageous for your long-term investment goals.

Understanding Dabur’s Growth and Fundamentals

Dabur India, a reputable player in the healthcare and wellness sector, has established itself with a strong portfolio of brands such as Dabur Chyawanprash, Real Hajmola, Vatika, Amla, Fem Honey, and Meswak Dabur Red. The company's annual turnover of over 8500 crore rupees and earnings exceeding 1400 crore rupees reflect a significant market presence and robust financial performance.

According to industry experts, the demand for ayurvedic and natural products has surged globally, driven by consumers seeking more holistic and traditional healthcare solutions. This wave of demand has positively impacted staples segments like Dabur. Financial metrics such as market capitalization, earnings before interest, tax, depreciation, and amortization (EBITDA), and book value provide a clearer picture of Dabur's financial health. Current key financial ratios include:

Market Cap: 85012.59 cr EBITDA: 1792.35 cr Book Value: 37.35 PE Ratio: 58.86 Dividend Yield: 0.60%

Dabur has a strategic focus on ayurvedic healthcare offerings and has demonstrated consistent growth. Consistent with this, Dabur has reported a 6.37% increase in consolidated sales for the quarter ended December 12, 2019, compared to the previous quarter. The net profit after tax for the same period was Rs 399.02 crore, indicating a positive trend in profitability.

Evaluating the Current Market Conditions

The monthly chart analysis suggests that buyers have shown some strength, with the Heikin Ashi candle breaking the 515 mark. However, this trend is still under observation, and selling pressures from sellers are also notable. This implies that while buyers are showing interest, there is no significant driver of sustained upward momentum at the moment.

Considerations for exiting Dabur and investing in ITC need careful examination. ITC, while a strong competitor in the same sector, might not offer the same level of growth potential or dividend yield as Dabur. As of now, there are no strong buyers in the market for ITC, making it a less attractive option for heavy speculation.

Our Recommendation

We recommend retaining your 200 shares of Dabur for the following reasons:

Robust Financials: Dabur’s strong financial performance indicates sustained growth, which aligns with long-term investment goals. Dividend History: Dabur has a consistent history of dividend payments, providing regular income to shareholders. Market Growth: The increasing demand for ayurvedic and natural products supports a bullish outlook for Dabur. No Urgency: If you are a long-term investor, the current market conditions do not necessitate an immediate Sell order.

For further updates and detailed financial analysis, we recommend staying informed through financial news portals and maintaining a diversified portfolio that aligns with your investment philosophy.

Thank you for considering this analysis. For more insights and personalized investment advice, feel free to reach out.