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Dabur (DABUR IN, INR 94, Buy)
n Result bang in line; maintains double digit volume growth of ~10%
Dabur’s Q3FY11 revenues increased 16.6% Y-o-Y to INR 10.8 bn (our estimate ~INR
10.7 bn). Net profit growth of 10.9% Y -o-Y to INR 1.5 bn (bang in-line with our estimate
of INR 1.5 bn) was impacted by increase in tax rate, which jumped 228bps Y-o-Y to
18.8%. Volume growth was ~10% Y-o-Y in the domestic business.
n Margins pressure offset by lower ad spends
The company’s EBITDA grew 19.2% Y-o-Y to ~INR 2.1 bn as EBITDA margin expanded
41bps Y-o-Y to 19.4%. COGS increase of 282bps was offset by lower advertising and
sales promotion (A&P) spend (~210bps), lower staff costs (~52bps) and lower other
expenditure (~63bps). With increasing competition and competitors spending heavily on
ads; it needs to be watched if Dabur is able to sustain sales in terms of volumes at such
low A&P spending.
n Growth across SBUs; shampoo the only concern
The company’s consumer care division (CCD) registered an 13.8% top line growth in
Q3FY11 to ~INR 8.7 bn; the division posted strong growth across categories with hair oil
posting 15% growth during Q3FY11; oral care posted 9.4% growth; health supplements
grew at 12.7%; home care reported robust growth of 24.2%; foods bounced back with
42% growth; skin care, including the Fem portfolio, grew at 18%; and shampoos
witnessed contraction of 29.8% in Q3FY11. CHD sales grew 13.8% Y-o-Y in Q3FY11.
Dabur’s international business registered a 19.2% top line growth led by Nigeria, Egypt,
Levant, North Africa, and GCC.
n Outlook and valuations: Strong volume growth; maintain ‘BUY’
Volumes were robust in the domestic and international business in Q3FY11. The only
negative is the higher tax rate and reduced ad spend in high competitive scenario.
However with higher margins, increase in market share and consolidation of Namaste
from Q4FY11, we re-iterate our ‘BUY’ recommendation on the stock and rate it ‘Sector
Outperformer’ on relative returns basis.
India Equity Research Reports, IPO and Stock News Visit http://indiaer.blogspot.com/ for complete details �� ��
Dabur (DABUR IN, INR 94, Buy)
n Result bang in line; maintains double digit volume growth of ~10%
Dabur’s Q3FY11 revenues increased 16.6% Y-o-Y to INR 10.8 bn (our estimate ~INR
10.7 bn). Net profit growth of 10.9% Y -o-Y to INR 1.5 bn (bang in-line with our estimate
of INR 1.5 bn) was impacted by increase in tax rate, which jumped 228bps Y-o-Y to
18.8%. Volume growth was ~10% Y-o-Y in the domestic business.
n Margins pressure offset by lower ad spends
The company’s EBITDA grew 19.2% Y-o-Y to ~INR 2.1 bn as EBITDA margin expanded
41bps Y-o-Y to 19.4%. COGS increase of 282bps was offset by lower advertising and
sales promotion (A&P) spend (~210bps), lower staff costs (~52bps) and lower other
expenditure (~63bps). With increasing competition and competitors spending heavily on
ads; it needs to be watched if Dabur is able to sustain sales in terms of volumes at such
low A&P spending.
n Growth across SBUs; shampoo the only concern
The company’s consumer care division (CCD) registered an 13.8% top line growth in
Q3FY11 to ~INR 8.7 bn; the division posted strong growth across categories with hair oil
posting 15% growth during Q3FY11; oral care posted 9.4% growth; health supplements
grew at 12.7%; home care reported robust growth of 24.2%; foods bounced back with
42% growth; skin care, including the Fem portfolio, grew at 18%; and shampoos
witnessed contraction of 29.8% in Q3FY11. CHD sales grew 13.8% Y-o-Y in Q3FY11.
Dabur’s international business registered a 19.2% top line growth led by Nigeria, Egypt,
Levant, North Africa, and GCC.
n Outlook and valuations: Strong volume growth; maintain ‘BUY’
Volumes were robust in the domestic and international business in Q3FY11. The only
negative is the higher tax rate and reduced ad spend in high competitive scenario.
However with higher margins, increase in market share and consolidation of Namaste
from Q4FY11, we re-iterate our ‘BUY’ recommendation on the stock and rate it ‘Sector
Outperformer’ on relative returns basis.
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