Please Share:: 
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Dabur (CMP Rs99, TP Rs109, Reco- ACCUMULATE with an upside of 10%)
Investment Rationale
Dabur India's (Dabur) rural segment is facing slowdown which impacted its H1FY12
performance. Consolidated net sales has shown robust 31% growth led by its recent
acquisitions (Hobi Kozmetic and Namaste Group), excluding the same, sales grew at
a slower pace of 13% during H1FY12. Hair oil and food categories were the exception
and clocked strong growth of 21% and 30% during H1FY12 while skin care, health
supplement, oral care and home care displayed muted growth of 7%, 4%, 9% and
10% growth respectively during H1FY12. We have not witnessed the recovery of shampoo
business during H1FY12 which posted 24% YoY decline due to sharp price cut by its
peers.
Dabur's international business (excluding recent acquisitions) displayed 18% growth
in H1FY12 which was also lower as compared to the past three years' >25% history.
GCC, Egypt and Nigeria continue to perform well and registered 27%, 27% and 36%
growth during H1FY12 respectively.
We expect EBITDA margin during FY12-14E would be lower than FY10-11 as we
believe higher contribution of low margin acquisitions. Hobi Kozmetic and Namaste
Group fetch low profitability profile which would change the overall profitability profile of
the company. We expect Hobi and Namaste would combined contribute 13% and 10%
of consolidated sales and EBITDA of FY14.
VALUATIONS AND RECOMMENDATION
Dabur's strong presence in the domestic market through its robust portfolio and regular
entrance in geographies enabled it to maintain its high growth momentum. We retain our
25x multiple on 12-month forward earnings and derive TP of Rs109 (earlier Rs107). We
maintain our 'ACCUMULATE' rating on the stock.
Valuations factors near term worry
Dabur India's (Dabur) rural segment is facing slowdown which impacted its
H1FY12 performance. Consolidated net sales shown robust 31% growth led
by recent acquisitions (Hobi Kozmetic and Namaste Group), excluding the
same, sales grew at a slower pace of 13% during H1FY12. Profitability was
also subdued on account of input price pressure and higher sales
contribution from low EBITDA margin acquisitions.
We expect softening of input prices along with better rural traction would
improve the performance going forward. We expect net sales and net
earnings to show 17% and 19% CAGR during FY11-14E. We maintain our
ACCUMULATE rating with TP of Rs109.
Domestic business slowing down
Dabur's domestic business (68% of sales) displayed mere ~12% growth during
H1FY12 and impacted overall performance. Hair oil and food categories were the
exception and clocked strong growth of 21% and 30% during H1FY12. While skin
care, health supplement, oral care and home care displayed muted growth of 7%,
4%, 9% and 10% growth respectively during H1FY12. Shampoo business could
not recover due to sharp shampoo price cut by its peers and posted 24% decline
in H1FY12.
International business growth sustainable
Dabur's international business (excluding recent acquisitions) displayed 18% growth
in H1FY12 which was lower as compared to past three years' >25% history. GCC,
Egypt and Nigeria continue to perform well and registered 27%, 27% and 36%
growth during H1FY12 respectively.
EBITDA margin to be lower
We expect EBITDA margin during FY12-14E would be lower than FY10-11 as we
believe higher contribution of low margin acquisitions. Hobi Kozmetic and Namaste
Group fetch low profitability profile which would change the overall profitability profile
of the company. We expect Hobi and Namaste would combined contribute 13%
and 10% of consolidated sales and EBITDA of FY14.
VALUATIONS AND RECOMMENDATION
Dabur's strong presence in the domestic market through its robust portfolio and
regular entrance in geographies enabled it to maintain its high growth momentum.
We retain our 25x multiple on 12-month forward earnings and derive TP of Rs109
(earlier Rs107). We maintain our 'ACCUMULATE' rating on the stock
India Equity Research Reports, IPO and Stock News Visit http://indiaer.blogspot.com/ for complete details �� ��
Dabur (CMP Rs99, TP Rs109, Reco- ACCUMULATE with an upside of 10%)
Investment Rationale
Dabur India's (Dabur) rural segment is facing slowdown which impacted its H1FY12
performance. Consolidated net sales has shown robust 31% growth led by its recent
acquisitions (Hobi Kozmetic and Namaste Group), excluding the same, sales grew at
a slower pace of 13% during H1FY12. Hair oil and food categories were the exception
and clocked strong growth of 21% and 30% during H1FY12 while skin care, health
supplement, oral care and home care displayed muted growth of 7%, 4%, 9% and
10% growth respectively during H1FY12. We have not witnessed the recovery of shampoo
business during H1FY12 which posted 24% YoY decline due to sharp price cut by its
peers.
Dabur's international business (excluding recent acquisitions) displayed 18% growth
in H1FY12 which was also lower as compared to the past three years' >25% history.
GCC, Egypt and Nigeria continue to perform well and registered 27%, 27% and 36%
growth during H1FY12 respectively.
We expect EBITDA margin during FY12-14E would be lower than FY10-11 as we
believe higher contribution of low margin acquisitions. Hobi Kozmetic and Namaste
Group fetch low profitability profile which would change the overall profitability profile of
the company. We expect Hobi and Namaste would combined contribute 13% and 10%
of consolidated sales and EBITDA of FY14.
VALUATIONS AND RECOMMENDATION
Dabur's strong presence in the domestic market through its robust portfolio and regular
entrance in geographies enabled it to maintain its high growth momentum. We retain our
25x multiple on 12-month forward earnings and derive TP of Rs109 (earlier Rs107). We
maintain our 'ACCUMULATE' rating on the stock.
Valuations factors near term worry
Dabur India's (Dabur) rural segment is facing slowdown which impacted its
H1FY12 performance. Consolidated net sales shown robust 31% growth led
by recent acquisitions (Hobi Kozmetic and Namaste Group), excluding the
same, sales grew at a slower pace of 13% during H1FY12. Profitability was
also subdued on account of input price pressure and higher sales
contribution from low EBITDA margin acquisitions.
We expect softening of input prices along with better rural traction would
improve the performance going forward. We expect net sales and net
earnings to show 17% and 19% CAGR during FY11-14E. We maintain our
ACCUMULATE rating with TP of Rs109.
Domestic business slowing down
Dabur's domestic business (68% of sales) displayed mere ~12% growth during
H1FY12 and impacted overall performance. Hair oil and food categories were the
exception and clocked strong growth of 21% and 30% during H1FY12. While skin
care, health supplement, oral care and home care displayed muted growth of 7%,
4%, 9% and 10% growth respectively during H1FY12. Shampoo business could
not recover due to sharp shampoo price cut by its peers and posted 24% decline
in H1FY12.
International business growth sustainable
Dabur's international business (excluding recent acquisitions) displayed 18% growth
in H1FY12 which was lower as compared to past three years' >25% history. GCC,
Egypt and Nigeria continue to perform well and registered 27%, 27% and 36%
growth during H1FY12 respectively.
EBITDA margin to be lower
We expect EBITDA margin during FY12-14E would be lower than FY10-11 as we
believe higher contribution of low margin acquisitions. Hobi Kozmetic and Namaste
Group fetch low profitability profile which would change the overall profitability profile
of the company. We expect Hobi and Namaste would combined contribute 13%
and 10% of consolidated sales and EBITDA of FY14.
VALUATIONS AND RECOMMENDATION
Dabur's strong presence in the domestic market through its robust portfolio and
regular entrance in geographies enabled it to maintain its high growth momentum.
We retain our 25x multiple on 12-month forward earnings and derive TP of Rs109
(earlier Rs107). We maintain our 'ACCUMULATE' rating on the stock
No comments:
Post a Comment