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Dabur India Limited
Neutral
DABU.BO, DABUR IN
Q4FY11 First Impressions: Domestic business drives
growth
• In-line earnings performance, domestic business drives earnings
growth. Dabur reported consolidated net Sales, EBITDA and PAT
growth of 31%, 27% and 10% y/y respectively for Q4FY11.
Consolidated earnings for Q4FY11 include financials for Hobi and
Namaste, excluding which LTL sales growth was 13.5% y/y. On
standalone (domestic) business sales, EBITDA and PAT grew 14%,
29% and 19% respectively. Lower A&P spends for domestic business (-
19% y/y) was a key driver for earnings growth with subdued
international business performance.
• Domestic volume growth at 9.5%. Domestic price/mix growth was
c5.5%. International division (ex-Hobi and Namaste) registered subdued
sales growth of 10% impacted negatively by sales disruption in MENA
region and currency translational losses (c3.5% -ve impact).
• Low A&P spends for domestic business help offset weak domestic
gross margins and poor overseas margins to a large extent. High
input cost pressures continued during Q4FY11 with domestic gross
margins declining 130bp y/y. Poor organic sales growth for overseas
business also weighed on margins. However, sharp decline in advertising
spends for domestic business (-19% y/y), helped restrict consolidated
EBITDA margin decline to 50bp y/y. Higher tax rate further moderated
consolidated PAT growth to 10% despite PBT growth of 18%.
• Category sales performance: Positive surprise for Hair oils, foods &
health supplements ; Shampoos and toothpastes disappoint – 1) Hair
care segment grew 11% y/y with hair oils growing 22% (supported by
aggressive price hikes of 12-13%) and shampoo sales registering decline
of 32% y/y during the quarter, 2) Oral care saw revenue growth of 9%
with toothpaste sales growth moderating to 12% and toothpowder rising
1.4% y/y, 3) Health supplements registered impressive revenue growth
of 21% y/y led by glucose sales, 4) Sales for digestives category suffered
(-4% y/y) on account of poor sales for candies, 5) Skin care sales
continued the growth momentum at 26% y/y led by Fem portfolio, 5)
Home care sales grew 31% y/y, 6) CHD sales grew 14%, and 7) Foods
division registered strong volume led 30% y/y sales growth.
• Others. 1) Namaste business registered 16% EBITDA margin during
Q4FY11, 2) Effective tax rate was up 570bp y/y due to higher MAT and
inclusion of Namaste and Hobi, and 3) Interest cost was up 3x owing to
debt undertaken for Namaste acquisition. As of Mar’11 total debt was
Rs10.5bn.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Dabur India Limited
Neutral
DABU.BO, DABUR IN
Q4FY11 First Impressions: Domestic business drives
growth
• In-line earnings performance, domestic business drives earnings
growth. Dabur reported consolidated net Sales, EBITDA and PAT
growth of 31%, 27% and 10% y/y respectively for Q4FY11.
Consolidated earnings for Q4FY11 include financials for Hobi and
Namaste, excluding which LTL sales growth was 13.5% y/y. On
standalone (domestic) business sales, EBITDA and PAT grew 14%,
29% and 19% respectively. Lower A&P spends for domestic business (-
19% y/y) was a key driver for earnings growth with subdued
international business performance.
• Domestic volume growth at 9.5%. Domestic price/mix growth was
c5.5%. International division (ex-Hobi and Namaste) registered subdued
sales growth of 10% impacted negatively by sales disruption in MENA
region and currency translational losses (c3.5% -ve impact).
• Low A&P spends for domestic business help offset weak domestic
gross margins and poor overseas margins to a large extent. High
input cost pressures continued during Q4FY11 with domestic gross
margins declining 130bp y/y. Poor organic sales growth for overseas
business also weighed on margins. However, sharp decline in advertising
spends for domestic business (-19% y/y), helped restrict consolidated
EBITDA margin decline to 50bp y/y. Higher tax rate further moderated
consolidated PAT growth to 10% despite PBT growth of 18%.
• Category sales performance: Positive surprise for Hair oils, foods &
health supplements ; Shampoos and toothpastes disappoint – 1) Hair
care segment grew 11% y/y with hair oils growing 22% (supported by
aggressive price hikes of 12-13%) and shampoo sales registering decline
of 32% y/y during the quarter, 2) Oral care saw revenue growth of 9%
with toothpaste sales growth moderating to 12% and toothpowder rising
1.4% y/y, 3) Health supplements registered impressive revenue growth
of 21% y/y led by glucose sales, 4) Sales for digestives category suffered
(-4% y/y) on account of poor sales for candies, 5) Skin care sales
continued the growth momentum at 26% y/y led by Fem portfolio, 5)
Home care sales grew 31% y/y, 6) CHD sales grew 14%, and 7) Foods
division registered strong volume led 30% y/y sales growth.
• Others. 1) Namaste business registered 16% EBITDA margin during
Q4FY11, 2) Effective tax rate was up 570bp y/y due to higher MAT and
inclusion of Namaste and Hobi, and 3) Interest cost was up 3x owing to
debt undertaken for Namaste acquisition. As of Mar’11 total debt was
Rs10.5bn.
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