dabur india result updated

8/3/2019 Dabur India Result Updated

1/12

Please refer to important disclosures at the end of this report 1

(` cr) 3QFY12 3QFY11 % yoy Angel Est % DiffRevenue 1,453 1,080 34.5 1,347 7.9EBITDA 221 210 5.7 253 (12.3)OPM (%) 15.2 19.4 (416bp) 18.8 (351bp)PAT 173 154 11.9 182 (5.1)

Source: Company, Angel Research

Dabur reported an impressive performance for 3QFY2012. Top-line growth was

strong at 34.5% yoy, above our estimates, driven by a mix of volume and value

growth and recent acquisitions. Earnings grew by 11.9% yoy, below our estimates.We maintain our Accumulate recommendation on the stock.Key highlights for the quarter: During 3QFY2012, the companys domesticbusiness growth stood at 16% yoy, while the international business (ex.

acquisitions) grew by 38%yoy. The consumer care division grew by 15% yoy, with

all categories registering healthy growth. Hobi and Namaste reported healthy

top-line growth of 44% yoy and 16% yoy, respectively. The company reported a

416bp yoy decline in OPM due to increased input costs and a rise in ad spends

and other expenses.

Outlook and valuation: Post 3QFY2012 results, we maintain our revenue andearnings estimates. We expect the company to grow at a ~20% CAGR over

FY201113E, backed by its recent acquisitions. We have modeled in flat OPM for

FY2012E and FY2013E due to sustained gross margin pressure and upon higher

ad spends because of a stronger competitive environment. At the CMP, the stockis trading at 24x FY2013E EPS. We maintain our Accumulate rating on the stockwith a target price of `110.Key financialsY/E March (` cr) FY2010 FY2011 FY2012E FY2013ENet sales 3,390 4,077 5,179 5,919% chg 20.9 20.3 27.0 14.3

Net profit (Adj.) 500.5 568.9 665.8 794.8% chg 28.1 13.7 17.0 19.4

EBITDA (%) 18.6 18.5 17.8 18.4

EPS (`) 2.9 3.3 3.8 4.6P/E (x) 33.6 29.7 25.3 21.2

P/BV (x) 9.0 12.1 9.9 8.1

RoE (%) 57.1 48.9 43.1 42.0

RoCE (%) 52.3 37.5 31.4 33.1

EV/Sales (x) 5.0 4.3 3.4 2.9

EV/EBITDA (x) 26.8 23.4 18.9 15.8


ACCUMULATECMP `97

Target Price `110

Investment Period 12 Months

Stock Info

Sector

Bloomberg Code

Shareholding Pattern (%)

Promoters 68.7

MF / Banks / Indian Fls 6.1

FII / NRIs / OCBs 19.5

Indian Public / Others 5.7

Abs.(%) 3m 1yr 3yr

Sensex (2.7) (11.6) 80.9

Dabur (3.1) 1.4 151.3

DABUR@IN

Face Value (`)

BSE Sensex

Nifty

Reuters Code

1

17,705

5,327

DABU.BO

FMCG

Avg. Daily Volume

Market Cap (`cr)

Beta

52 Week High / Low

17,581

0.3

87 / 122

180,349

Sreekanth P.V.S022 3935 7800 Ext: 6841

[email protected]

Dabur IndiaPerformance Highlights

Dabur | 3QFY2012 Result Update

February 2, 2012


2/12


February 2, 2012 2

Exhibit 1:Quarterly performanceY/E March (` cr) 3QFY12 3QFY11 % chg 9MFY2011 9MFY2012 % chgNet Sales 1,453 1,080 34.5 3,920 2,969 32.0Consumption of RM 740 523 41.5 2,000 1,416 41.3(% of Sales) 51.0 48.4 51.0 47.7

Staff Costs 106 80 31.8 302 231 30.9

(% of Sales) 7.3 7.4 7.7 7.8

Advertising 198 135 46.9 477 407 17.3

(% of Sales) 13.6 12.5 12.2 13.7

Other Expenses 187 132 41.4 511 366 39.6

(% of Sales) 12.9 12.2 13.0 12.3

Total Expenditure 1,231 870 41.4 3,291 2,420 36.0Operating Profit 221 210 5.7 629 549 14.5OPM (%) 15.2 19.4 16.0 18.5

Interest 18 5 240.6 48 14 255.7

Depreciation 21 23 (10.6) 64 57 12.1

Other Income 23 9 160.9 65 40 62.2

PBT (excl. Extr. Items) 206 190 8.3 582 519 12.1Extr. Income/(Expense) - - - -

PBT (incl. Extr. Items) 206 190 8.3 582 519 12.1(% of Sales) 14.1 17.6 14.9 17.5

Provision for Taxation 34 36 (5.6) 109 98 11.3

(% of PBT) 16.4 18.8 18.7 18.8

PAT (Before Minority) 172 154 11.5 474 422 12.3Minority Interest (1.0) (0.4) (0.8) 0.3Reported PAT 173 154 11.9 474 421 12.6PATM (%) 11.9 14.3 12.1 14.2

Equity shares (cr) 174 174 174 174

FDEPS (`) 1.0 0.9 11.9 2.7 2.4 12.6Source: Company, Angel Research

Low volume growth in domestic business, IBD grows strongly

Dabur posted strong top-line growth of 34.5% yoy to `1,453cr (`1,080cr) on a

consolidated basis, led by volume growth of 10.8% yoy. International business, in

constant currency terms, grew by 26.5% yoy and reported 37.8% yoy growth.


3/12


February 2, 2012 3

Exhibit 2:Acquisitions led to top-line growth


Exhibit 3:Modest volume growth in 3QFY2012


Earnings growth at 11.9% yoy

Daburs reported earnings for the quarter on a consolidated basis registered

modest growth of 11.9% yoy to `173cr (`154cr), in-line with our estimates.

Gross margin remains under pressure, drags OPM

On the operating front, Dabur delivered a margin contraction of 416bp yoy to

15.2% (19.4%) due to a 253bp contraction in gross margin and higher ad spends

(up 115bp yoy).

Exhibit 4:Modest earnings growth


Exhibit 5:OPM contracts by 416 bp as ad spends rise


-

5.0

10.0

15.0

20.0

25.0

30.0

35.0

10

60

110

160

210

3Q10

4Q10

1Q11

2Q11

3Q11

4Q11

1Q12

2Q12

3Q12

(yoy%)(`

cr)

PAT (LHS) yoy growth (RHS)

11.0

13.3

19.5

14.0

10.0

12.7

8.610.0 10.8

-

5.0

10.0

15.0

20.0

25.0

3Q10

4Q10

1Q11

2Q11

3Q11

4Q11

1Q12

2Q12

3Q12

(%)

-

5.0

10.0

15.0

20.0

25.0

30.0

35.0

10

60

110

160

210

3Q10

4Q10

1Q11

2Q11

3Q11

4Q11

1Q12

2Q12

3Q12

(yoy%)(`

cr)

PAT (LHS) yoy growth (RHS)

19.0 19.1 18.7 20.9 19.4 18.614.2

18.7 18.8

54.4 54.7 50.0 52.9 51.6 55.9 47.8 50.051.0

14.6 13.610.1

12.5 12.5 11.5 12.6 10.112.5

-

10.0

20.0

30.0

40.0

50.0

60.0

3Q10

4Q10

1Q11

2Q11

3Q11

4Q11

1Q12

2Q12

3Q12

(%)

OPM Gross margin A&P Spends


4/12


February 2, 2012 4

Exhibit 6:3QFY2012 Category-wise growth (Consolidated)Business Division Growth (%) CommentsConsumer Care Division 34.6 Growth was driven by volume and price hikes.Hair Care 19.6

Hair oils grew by robust 22% in 3QFY2012, driven by price hikes and volume growth,with both Dabur Amla hair oil and Vatika performing well. Also, Amla coconut hair oilperformed well and gained market share.Shampoos growth stood at 4.1% during the quarter.

Oral Care 11.6Toothpastes grew by 14.4%.Toothpowder grew by 4.5%.

Health Supplements 13.5Dabur Honey and Chywanprash contributed to the category growth. (DaburChywanprash grew in double digits.)

Digestives & Baby care 19.3 Lal Tail grew in double digits, Hajmola performed well despite price hikes

Skin care 4.9Sales were impacted by distribution re-alignment.Fem bleach reported double digit sales growth.

The company plans to expand Uveda portfolio in Delhi and Mumbai

Home Care 18.0Odonil drove the categorys growth with healthy growth witnessed in all formats acrossregions.

Foods Division 22.4 Supply side constraints impacted the growth

International Business Division(excluding acquisitions) 37.8

Organic growth came in at 22.8%.

Constant currency growth stood at 26.5%.

Nigeria, Egypt and GCC grew well.

Hobi Group recorded `40.5cr sales and Namaste Group reported sales of `148.5cr


Exhibit 7:Segment-wise performance (Consolidated)Y/E Mar (` cr) 3QFY12 3QFY11 % chg 9MFY2012 9MFY2011 % chgTotal Gross Sales 1,463 1,088 34.5 3,949 2,992 31.9Consumer Care 1,276 948 34.6 3,375 2,553 32.2

Foods Business 138 112 22.4 444 368 20.5

Retail 12 6 112.3 30 14

Others 37 22 70.8 99 58 71.9

Total PBIT 291 265 9.6 1,205 1,079 11.6Consumer Care 269 248 8.6 727 656 10.8Foods Business 22 20 11.3 480 428 12.1

Retail (3) (2) (9) (7)

Others 4 0 7 3 161.9

PBIT Margin (%) 19.9 24.4 30.5 36.1Consumer Care 21.1 26.1 21.5 25.7

Foods Business 15.8 17.4 108.0 116.1

Retail - - - -

Others 9.8 1.6 6.9 4.5



5/12


February 2, 2012 5

Investment rationale

Niche positioning and acquisitions to drive growth: Daburs niche positioningbased on its ayurvedic/herbal positioning offers it an attractive and unique

proposition in terms of product portfolio. We believe the recent acquisitions

will contribute steadily to the companys top-line growth. We model in a 20%

CAGR in revenue over FY201113E, with health supplements, baby care,

home care and foods leading growth.

Margin to remain under pressure: We expect Dabur to remain under marginpressure due to increased raw-material prices. Also, due to new product

launches, various marketing initiatives and increased competition, the

companys ad spends could witness a spike. We have modeled in OPM of

~18% for FY2012E and FY2013E.

Acquisition rationale: The current acquisition provides Dabur entry into anattractive new market. Management has stated that integration of Hobi Group

and Namaste Group is on track and the company plans to introduce its core

products in international markets.

Outlook and valuation

Post 3QFY2012 results, we maintain our revenue and earnings estimates. We

expect the company to grow at a ~20% CAGR over FY201113E, backed by its

recent acquisitions. We have modeled in flat OPM for FY2012E and FY2013E due

to sustained gross margin pressure and upon higher ad spends because of a

stronger competitive environment. At the CMP, the stock is trading at 24x FY2013EEPS. We maintain our Accumulate rating on the stock with a target price of `110.


6/12


February 2, 2012 6

Exhibit 8:Peer valuationCompany Reco Mcap CMP TP Upside P/E (x) EV/Sales (x) RoE (%) CAGR #

(` cr) (`) (`) (%) FY11E FY12E FY11E FY12E FY11E FY12E Sales PATITC Accumulate 157,214 199 219 10 26.7 22.5 5.9 5.0 33.8 34.2 17.6 17.4

HUL Neutral 84,322 390 - - 33.3 29.3 3.7 3.2 87.7 85.1 12.7 17.2

Nestle Neutral 40,796 4,231 - - 41.8 34.5 5.3 4.4 91.3 73.8 20.2 20.2

Asian Paints Neutral 28,175 2,966 - - 28.9 23.5 3.0 2.5 39.6 38.3 17.3 19.8

Dabur Accumulate 16,785 97 110 14 25.3 21.2 3.3 2.8 43.1 42.0 20.5 18.2Colgate Neutral 13,596 1,000 - - 31.0 26.5 5.1 4.4 111.6 108.1 14.9 12.9

GCPL Neutral 14,012 433 - - 26.2 20.1 3.4 2.7 36.6 29.4 22.9 20.2

GSKCHL Neutral 11,212 2,666 - - 32.2 27.1 3.7 3.1 32.6 31.8 17.3 17.5

Marico Neutral 9,425 153 - - 30.9 24.1 2.5 2.2 29.9 29.0 17.8 28.2

TGBL Neutral 6,805 110 - - 20.3 15.9 0.9 0.8 8.4 10.2 9.0 42.3

Britannia Accumulate 5,566 466 495 6 30.2 20.7 1.1 0.9 37.8 46.0 17.5 36.0


Exhibit 9:Angel v/s Consensus estimatesTop-line (` cr) FY2011E FY2012E EPS (`) FY2011E FY2012EAngel estimates 5,179 5,919 Angel estimates 4.0 4.6

Consensus 5,146 5,958 Consensus 3.8 4.6

Diff (%) 0.7 (0.6) Diff (%) 6.0 0.2


Exhibit 10:Absolute returns of Dabur vs. Sensex


Exhibit 11:One-yr forward P/E Band


60%

70%

80%

90%

100%

110%

120%130%

Nov-1

0

Dec-1

0

Jan-1

1

Fe

b-1

1

Mar-

11

Apr-

11

May-1

1

Jun-1

1

Jul-11

Aug-1

1

Sep-1

1

Oc

t-11

Sensex Dabur

-

20

40

60

80

100

120140

Apr-

05

Dec-0

5

Aug-0

6

Apr-

07

Dec-0

7

Aug-0

8

Apr-

09

Dec-0

9

Aug-1

0

Apr-

11

Share

Price

(`)

15x 20x 25x 30x


7/12


February 2, 2012 7

Exhibit 12:One-yr forward P/E chart


Exhibit 13:One-yr forward Prem vs. Sensex chart


-

5.0

10.0

15.0

20.0

25.0

30.0

35.0

Oct-06

Feb-0

7

Jun-0

7

Oct-07

Feb-0

8

Jun-0

8

Oct-08

Feb-0

9

Jun-0

9

Oct-09

Feb-1

0

Jun-1

0

Oct-10

Feb-1

1

Jun-1

1

Oct-11 -20%

0%

20%

40%

60%

80%

100%

120%

Apr-06

Aug-0

6

Dec-0

6

Apr-07

Aug-0

7

Dec-0

7

Apr-08

Aug-0

8

Dec-0

8

Apr-09

Aug-0

9

Dec-0

9

Apr-10

Aug-1

0

Dec-1

0

Apr-11

Aug-1

1

Dec-1

1


8/12


February 2, 2012 8

Profit & Loss Statement(Consolidated)Y/E March (` cr) FY2009 FY2010 FY2011 FY2012E FY2013EGross sales 2,834 3,416 4,110 5,226 5,973Less: Excise duty 29 25 32 47 54Net Sales 2,805 3,390 4,077 5,179 5,919

Other Operating Income - - - - -

Total operating income 2,805 3,390 4,077 5,179 5,919% chg 18.8 20.9 20.3 27.0 14.3

Total Expenditure 2,335 2,761 3,323 4,258 4,831Cost of Materials 1,376 1,551 1,905 2,487 2,800

Advertising Exp 343 493 535 699 79

Personnel 235 285 322 404 468

Others 381 432 561 668 764

EBITDA 470 629 755 922 1,089% chg 14.9 33.7 20.0 22.1 18.1

(% of Net Sales) 16.8 18.6 18.5 17.8 18.4

Depreciation& Amortisation 49 56 82 99 113

EBIT 421 573 673 823 976% chg 14.7 36.0 17.5 22.2 18.6

(% of Net Sales) 15.0 16.9 16.5 15.9 16.5

Interest & other Charges 23 20 30 47 44

Other Income 47 48 65 57 62

(% of PBT) 10.5 8.8 10.5 8.0 9.2

Share in profit of Associates - - - - -

Recurring PBT 445 601 708 832 994% chg 15.7 35.1 17.8 17.6 19.4

Prior Period & Extraordinary Expense/(Inc.) - 2 - - -

PBT (reported) 445 599 708 832 994Tax 54 100 139 166 199

(% of PBT) 12.1 16.7 19.6 20.0 20.0

PAT (reported) 391 498 569 666 795 Add: Share of earnings of associate - - - - -

Less: Minority interest (MI) (0.4) (0.8) 0.3 0.3 0.3

PAT after MI (reported) 391 499 569 666 795ADJ. PAT 391 501 569 666 795% chg 17.2 28.1 13.4 17.0 19.4

(% of Net Sales) 13.9 14.8 13.9 12.8 13.4

Basic EPS (`) 4.5 5.8 3.3 3.8 4.6Fully Diluted EPS ( ) 2.2 2.9 3.3 3.8 4.6% chg 17.2 28.1 13.4 17.0 19.4


9/12


February 2, 2012 9

Balance Sheet (Consolidated)

Y/E March (` cr) FY2009 FY2010 FY2011 FY2012E FY2013ESOURCES OF FUNDSEquity Share Capital 87 87 174 174 174Preference Capital - - - - -

Reserves& Surplus 732 848 1,217 1,525 1,910

Shareholders Funds 819 935 1,391 1,699 2,084Minority Interest 5 4 4 4 4Total Loans 230 179 1,051 1,051 1,021

Deferred Tax Liability 7 11 19 19 19

Total Liabilities 1,060 1,129 2,465 2,773 3,129APPLICATION OF FUNDSGross Block 799 986 1,934 2,354 2,691

Less: Acc. Depreciation 299 339 435 534 647

Net Block 500 647 1,499 1,820 2,044Capital Work-in-Progress 59 30 43 59 67

Goodwill - - - - -

Investments 347 264 427 377 377Current Assets 951 1,106 1,853 2,180 2,560

Cash 148 192 272 540 686

Loans & Advances 249 367 516 518 592

Other 553 546 1,064 1,122 1,283

Current liabilities 805 920 1,458 1,676 1,932

Net Current Assets 146 186 395 505 629Mis. Exp. not written off 9 3 101 12 12

Total Assets 1,060 1,129 2,465 2,773 3,129


10/12


February 2, 2012 10

Cash Flow Statement (Consolidated)

Y/E March (` cr) FY2009 FY2010 FY2011 FY2012E FY2013EProfit before tax 445 601 708 832 994

Depreciation 49 56 82 99 113Change in Working Capital (95) (48) (135) 182 (36)

Interest / Dividend (Net) 23 12 10 47 44

Direct taxes paid 54 100 139 166 199

Others (29) (11) 50 64 56

Cash Flow from Operations 340 510 576 1,058 971(Inc.)/ Dec. in Fixed Assets (129) (134) (961) (436) (345)

(Inc.)/ Dec. in Investments (122) (104) (163) 50 -

Cash Flow from Investing (251) (238) (1,124) (386) (345)Issue of Equity 5 (14) - - -

Inc./(Dec.) in loans 131 (51) 872 - (30)

Dividend Paid (Incl. Tax) 130 151 233 356 407

Interest / Dividend (Net) 23 12 10 47 44

Cash Flow from Financing (17) (228) 629 (404) (481)Inc./(Dec.) in Cash 72 44 80 268 145

Opening Cash balances 77 148 192 272 540Closing Cash balances 148 192 272 540 686


11/12


February 2, 2012 11

Key Ratios

Y/E March FY2009 FY2010 FY2011 FY2012E FY2013EValuation Ratio (x)P/E (on FDEPS) 43.1 33.6 29.7 25.3 21.2P/CEPS 19.0 15.1 25.9 22.1 18.6

P/BV 10.2 9.0 12.1 9.9 8.1

Dividend yield (%) 1.8 2.1 1.2 1.8 2.1

EV/Sales 6.0 5.0 4.3 3.4 2.9

EV/EBITDA 36.0 26.8 23.4 18.9 15.8

EV / Total Assets 16.0 14.9 7.2 6.3 5.5

Per Share Data (`)EPS (Basic) 4.5 5.8 3.3 3.8 4.6

EPS (fully diluted) 2.2 2.9 3.3 3.8 4.6

Cash EPS 5.1 6.4 3.7 4.4 5.2

DPS 1.7 2.0 1.2 1.8 2.0

Book Value 9.5 10.8 8.0 9.8 12.0

Returns (%)RoCE 47.2 52.3 37.5 31.4 33.1

Angel RoIC (Pre-tax) 47.4 51.6 34.6 29.7 33.4

RoE 54.4 57.1 48.9 43.1 42.0

Turnover ratios (x) Asset Turnover (Gross Block) 3.5 3.4 2.1 2.2 2.2

Inventory / Sales (days) 49 46 63 49 49

Receivables (days) 23 13 32 30 30

Payables (days) 60 50 64 62 62

WC (ex-cash) (days) (0) (1) 11 (3) (4)


12/12


February 2 2012 12

Research Team Tel: 022 - 39357800 E-mail: [email protected] Website: www.angelbroking.com

DISCLAIMERThis document is solely for the personal information of the recipient, and must not be singularly used as the basis of any investmentdecision. Nothing in this document should be construed as investment or financial advice. Each recipient of this document should make

such investigations as they deem necessary to arrive at an independent evaluation of an investment in the securities of the companies

referred to in this document (including the merits and risks involved), and should consult their own advisors to determine the merits and

risks of such an investment.

Angel Broking Limited, its affiliates, directors, its proprietary trading and investment businesses may, from time to time, make

investment decisions that are inconsistent with or contradictory to the recommendations expressed herein. The views contained in this

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Reports based on technical and derivative analysis center on studying charts of a stock's price movement, outstanding positions and

trading volume, as opposed to focusing on a company's fundamentals and, as such, may not match with a report on a company's

fundamentals.

The information in this document has been printed on the basis of publicly available information, internal data and other reliablesources believed to be true, but we do not represent that it is accurate or complete and it should not be relied on as such, as thisdocument is for general guidance only. Angel Broking Limited or any of its affiliates/ group companies shall not be in any wayresponsible for any loss or damage that may arise to any person from any inadvertent error in the information contained in this report .Angel Broking Limited has not independently verified all the information contained within this document. Accordingly, we cannot testify,nor make any representation or warranty, express or implied, to the accuracy, contents or data contained within this document. WhileAngel Broking Limited endeavours to update on a reasonable basis the information discussed in this material, there may be regulatory,compliance, or other reasons that prevent us from doing so.

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Note: Please refer to the important `Stock Holding Disclosure' report on the Angel website (Research Section). Also, please refer to thelatest update on respective stocks for the disclosure status in respect of those stocks. Angel Broking Limited and its affiliates may haveinvestment positions in the stocks recommended in this report.

Disclosure of Interest Statement Dabur

1. Analyst ownership of the stock No

2. Angel and its Group companies ownership of the stock No

3. Angel and its Group companies' Directors ownership of the stock No

4. Broking relationship with company covered No

Ratings (Returns): Buy (> 15%) Accumulate (5% to 15%) Neutral (-5 to 5%)Reduce (-5% to 15%) Sell (< -15%)

Note: We have not considered any Exposure below `1 lakh for Angel, its Group companies and Directors

dabur india result updated

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