Dabur India shares hit an eight-week low on Thursday after reports claimed the presence of carcinogenic materials in its honey product.
What Happened? According to an investigative report by Zee News, a high concentration of carcinogenic material was allegedly found in the popular brand Dabur Honey.
The Department of Consumer Affairs claims that hydroxymethylfurfural (HMF) naturally occurs in most kinds of honey and often serves as a quality indicator. They clarify that high HMF levels may result from poor storage, sugar additive adulteration, or excessive heat treatment. They also explain that the maximum HMF level in honey should be 80 milligrams per kilogram.
The investigation found that several samples of Dabur honey and honey from another brand contain HMF levels that exceed the maximum recommended quantity of 80 mg.
Impact on Dabur: Honey products contribute 6–7% to Dabur’s revenues in India, Abneesh Roy of Nuvama Wealth Management writes in a note shared with BQ Prime. “We don't expect a big impact on honey sales over a longer term,” Roy said, adding that in the short-term sales may face a "small impact."
Price Action: Shares of Dabur were trading 1.31% lower at ₹558.25 apiece. The stock fell as much as 3.54% earlier in the day to ₹545.65 apiece, the lowest level since June 6.
Out of the 46 analysts tracking Dabur, 29 maintain a “buy” rating on the stock, 15 recommend a “hold” and two rate it “sell”, according to Bloomberg data. The average of 12-month analyst price targets implies a potential upside of 5.1%.
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