Reliance Securities has maintained 'Neutral' on Dabur India with target price of Rs 239 in its report.

Commenting on the investment rationale, Reliance Securities said, ''Dabur reported consolidated revenue growth of 10.2% yoy, with domestic revenue growth of 12.1% yoy and international business revenue growth of 8.8% yoy. Gross margin benefit of 206bp yoy was partially re-invested in brand spends, aiding overall OPM expansion of 108bp yoy. While we like Dabur for its strong brand portfolio, the rural sales have started showing signs of fatigue and will be a drag on the consolidated financial of the company, going forward.

Q4FY15 result was a mixed bag vis-a-vis our estimates; while revenue was lower from our estimate by 5, the earnings were higher by 2%. The contours of the result, however, showed fatigue in the sales of Dabur Lal Tail and Hair Oils, which have very strong rural presence. Going forward, with unseasonal rainfall casting a dark cloud on the health of the rural economy, it is expected that rural India (50% of domestic sales for Dabur) will be a drag to the company's financials. We are, nevertheless, enthused with Dabur's focus on improving infrastructure to stimulate growth, which will augur well for the company in the long run.

However, we believe the positives are captured in the stock price. Hence, at the CMP, we maintain our NEUTRAL view on Dabur and we reduce our Fair Value from Rs 252 to Rs 239 to factor - 1) subdued rural demand in 1HFY16E and 2) steep valuations of the stock in context to lower growth (over FY15-17E, we expect revenue CAGR of 7.8% and earnings CAGR of 9.5% vis-à-vis 8.3% and 11.8% delivered respectively over FY13-15) and decreasing RoE (40% in FY13 decreasing to 31% in FY17E).''

Disclaimer: IRIS has taken due care and caution in compilation of data for its web site. Information has been obtained by IRIS from sources which it considers reliable. However, IRIS does not guarantee the accuracy, adequacy or completeness of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information. IRIS especially states that it has no financial liability whatsoever to any user on account of the use of information provided on its website.