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Dabur India
In line quarter; Expect
stronger H2-FY12
In line quarter; maintain estimates and PO
Dabur’s Q2 results were in line. While revenue was up 29% yoy and 3% ahead,
recurring PAT grew 8% yoy a tad below estimates. EBITDA margin declined
239bp yoy led by consolidation of international acquisitions of Hobi/ Namaste and
was 74bp below expected due to higher raw material costs. Post the quarter we
maintain estimates and retain Buy with an unchanged PO of Rs120.
Foods and international business post robust growth
Q2 saw 27.5% yoy revenue growth in foods led by sustained A&P support and
up-trading in the category. Company plans to build a fruit juice facility in Sri Lanka
to better service the South Indian market. International business grew robust
23%yoy mainly led by volumes (up 19%yoy). Key growth markets were Egypt,
GCC (each up 27%yoy) and Nigeria (up 36%yoy). Company continues to invest in
scaling up Hobi and Namaste through cross selling as well as capacity building.
Consumer care: volume growth to pick up in H2FY12
Consumer care posted a muted 8% growth (excl acquisitions) led by (1) supply
side constraints in toothpaste and digestives, (2) delay in institutional orders in
home care and (3) pending re-alignment of distribution in skin care and OTC/
ethicals. Growth is expected to revive in H2FY12 as these issues are addressed
along with (1) higher A&P support and (2) new launches across categories.
Retain Buy on valuations
Dabur now trades at one-year estimated forward P/E of 23x which is 10% lower
than its normalized 5 yr historical avg multiple. We believe the current multiple
can be sustained led by estimated 18% earnings CAGR and continuing pricing
power. Key risks: (1) unexpected increase in A&P spend, (2) raw material cost
pressures.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Dabur India
In line quarter; Expect
stronger H2-FY12
In line quarter; maintain estimates and PO
Dabur’s Q2 results were in line. While revenue was up 29% yoy and 3% ahead,
recurring PAT grew 8% yoy a tad below estimates. EBITDA margin declined
239bp yoy led by consolidation of international acquisitions of Hobi/ Namaste and
was 74bp below expected due to higher raw material costs. Post the quarter we
maintain estimates and retain Buy with an unchanged PO of Rs120.
Foods and international business post robust growth
Q2 saw 27.5% yoy revenue growth in foods led by sustained A&P support and
up-trading in the category. Company plans to build a fruit juice facility in Sri Lanka
to better service the South Indian market. International business grew robust
23%yoy mainly led by volumes (up 19%yoy). Key growth markets were Egypt,
GCC (each up 27%yoy) and Nigeria (up 36%yoy). Company continues to invest in
scaling up Hobi and Namaste through cross selling as well as capacity building.
Consumer care: volume growth to pick up in H2FY12
Consumer care posted a muted 8% growth (excl acquisitions) led by (1) supply
side constraints in toothpaste and digestives, (2) delay in institutional orders in
home care and (3) pending re-alignment of distribution in skin care and OTC/
ethicals. Growth is expected to revive in H2FY12 as these issues are addressed
along with (1) higher A&P support and (2) new launches across categories.
Retain Buy on valuations
Dabur now trades at one-year estimated forward P/E of 23x which is 10% lower
than its normalized 5 yr historical avg multiple. We believe the current multiple
can be sustained led by estimated 18% earnings CAGR and continuing pricing
power. Key risks: (1) unexpected increase in A&P spend, (2) raw material cost
pressures.
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