Dabur India Ltd shares dropped as much as 4.6% in intraday trade on Tuesday after global brokerage firm Goldman Sachs downgraded the stock to ‘sell’ from ‘neutral’.
Citing competition in key segments as the main reason for downgrade, Goldman Sachs revised the target price for the Dabur India stock to Rs 334 from Rs 375 earlier, implying 16.66% potential downside from the current level.
“Juices, hair care and oral care are seeing heightened competition. We see resurging of price-led competition in the low-unit hair oil packs," Goldman Sachs said, adding oral care is seeing a resurgence of competition from Colgate.
The brokerage firm said Dabur has high exposure to rural India for its domestic business. A slowdown in agricultural and rural wages is likely to affect consumption growth, consequently hitting Dabur’s revenues.
At 11:17 am, Dabur India was trading at Rs 389, down nearly 3%, on BSE. The stock has already lost over 10% in the last three months. Other FMCG shares were also trading lower in Tuesday’s session.
Shares of Emami were down 2%, while those of Jubilant Foodworks, Marico, Hindustan Unilever Ltd, Britannia and United Breweries were down nearly 1% each. Aditya Agarwala, senior manager, Technical Analysis, YES Securities, said, “Technically, on the daily chart, Dabur has completed its wave 4 and resumed its impulse wave 5, which is a down wave within a massive 5 wave correction."
He said a move below Rs 398 will drag it lower to levels of Rs 378-356. Moreover, on the weekly time frame, it has turned lower after facing resistance at the 50% Fibonacci retracement level, suggesting lower levels in the coming trading sessions, he added.
RSI is also suggesting lower levels in the coming trading sessions as it has turned lower from the 60 zone, Agarwala said, adding that the stock may be sold in the range of Rs 404-400 for targets of Rs 378-356, keeping a stop loss above Rs 415.
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