Dabur India Ltd. |Q2FY15 Result Update | Mixed set of numbers, cautious and optimistic growth outlook; Maintain HOLD rating with target price of Rs 204 :: IndiaNivesh

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Dabur India Ltd reported Q2FY15 results which were in-line with consensus
estimates. Net sales of the company increased 10.4% yoy to reach Rs 19241 mn in
Q2FY15 from 17435 mn in Q2FY14 (vs consensus est: Rs 19917 mn). This was led by
domestic FMCG business which grew by 13.8% yoy while international business
grew by 6.6% yoy (8.3% yoy on constant currency basis). Domestic business grew
with volume growth of 8.7%. During the quarter, gross margin contracted 66 bps at
53% against 53.7% in Q2FY14. EBITDA grew 6.6% yoy to reach Rs 3508 mn in Q2FY15
against Rs 3292 mn in Q2FY14. EBITDA margin contracted 65 bps yoy to reach 18.2%
in Q2FY15 from 18.9% in Q2FY14. This was on account of pressure in domestic
FMCG business which contracted 143 bps yoy. PAT increased 15.1% yoy to reach Rs
2875 mn in Q2FY15 from Rs 2497 mn in Q2FY14. This was on account of higher
other income (72.1% yoy) and reduction in interest cost (49% yoy).
For H1FY15, net sales grew 11.7% yoy at Rs 37880 mn against Rs 33905 mn in
H1FY14. EBITDA grew 9.2% yoy to reach Rs 6189 mn from Rs 5669 mn in H1FY14.
EBITDA margin contracted 38 bps yoy to reach 16.3%. PAT grew 14.3% yoy to reach
Rs 4983 mn from Rs 4359 mn in H1FY14. PAT growth was higher on account of
higher other income (34.3% yoy) and reduction in interest cost (39% yoy).
Double digit growth across most of the sectors
Consumer care business, contributing 83.3% to total sales, grew 7.6% yoy in Q2FY15
driven by growth across categories. Health supplements grew at 10.1% yoy driven
by Glucose and Honey. Dabur Ratnaprakash will be launched on pan India basis.
Digestives category grew at 12.3% yoy. OTC and Ethicals portfolio grew by 7.5% yoy
in Q2FY15 driven by ethicals portfolio which contributes 40% to OTC and ethicals
category. OTC category was sluggish due to late onset of monsoons. Haircare
portfolio reported 13.9% yoy growth in Q2FY15 while shampoo grew by 15.4% yoy
in the same period. Home care category grew by 10.2% yoy in Q2FY15 impacted by
delayed monsoon. Skincare grew 10% yoy in Q2FY15 fuelled by double digit growth
in Fem bleach. Oral Care grew by 8.1% yoy in Q2FY15 with toothpastes growing by
11.5% yoy. Dabur Red Toothpaste and Meswak toothpaste grew in double digits
and increased market share. Foods business grew by 29% yoy in Q2FY15 with Real
fruit juices growing at double digit across channels and regions.
International business grew 6.6% yoy
International business grew by 6.6% yoy in Q2FY15 with double digit constant growth
rates in key geographies. Constant currency growth was 8.3% yoy driven by GCC
(24% yoy), Egypt (28% yoy), Turkey (32% yoy) and Levant (27% yoy) markets. Organic
international business grew 17.5% in constant currency driven by GCC, Egypt and
Turkey. Namaste business was under pressure due to category slowdown in the US
and high base in non US markets. EBITDA margin remained improved 94 bps at
19.7% in Q2FY15 against 18.8% in Q2FY14. PAT grew 25.8% yoy at Rs 1001 mn in
Q2FY15 with PAT margin expansion of 241 bps yoy at 15.8% yoy.

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