Dabur is the local brand in the personal care sector with its unique products it does have its competitive edge in its business. They reported return on equity of 36% last year and that attractive returns do attract all the investors to invest in it.

The first half of 2016 have seen revenues grow by 10% and it’s EBIT by 20% and net profits by 21%. The market still do expect its return on equity for the year 2016 to be around 34%. The stock price has not gone anywhere in the last 6 months but for the same period NSE 500 have fallen down by 7%.

Coming to the valuations, the expected earnings for the year 2016 is Rs 7.35 and that reflects PE ratio of 36 times or a book value of 11 times from its todays price. The market is expecting earnings growth rate in the range of 15%- 18% for the coming future quarters and that has reflected in the current results. But for that paying Rs 260 today won’t give any power to your earnings. In other words, to earn Rs 100 from this business you will have to invest Rs 3600.

We think Dabur India is trading at expensive valuations to its expected 2016 and 2017 values.

Aziz Dodhiya is the chief investment officer for the Valueoperations funds.