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M a r g i n s t o r e m a i n u n d e r p r e s s u r e …
Dabur India’s (DIL) Q1FY12 results were in line with our expectations on
the topline front at | 1204.6 crore (I-direct estimate: | 1245.8 crore),
reporting a growth of 31.4% YoY. However, the margins disappointed on
account of substantial increase in raw material (RM) prices in FY11. The
RM cost to sales ratio increased ~500 bps YoY to 52.2% in Q1FY12 but a
rationalisation in the advertisement cost at 12.6% of net sales from 16.4%
of net sales in Q1FY11, helped the margin slippage to be moderate at 100
bps YoY and stood at 14.8% (Q1FY12) compared to 15.8% in the
corresponding quarter last year. In spite of subdued margins and higher
interest cost (| 12.6 crore compared to | 3.6 crore in Q1FY11), the robust
growth in topline helped the earnings to report a growth of 19.1% to |
127.7 crore.
ƒ Highlights of the quarter
DIL’s reported sales increase of 31.4% YoY was led by the inclusion of
sales of Hobi Kozmetik and Namasté LLC. Sales growth excluding these
acquisitions stood at 13.8% with the volume growth of 8.6%. Hence,
Namasté and Hobi contributed growth of 17.6% to the topline. DIL’s
international business excluding the acquisitions reported a sales growth
of 12.5% in value terms.
On a segment wise basis, the consumer care division (CCD) experienced
the highest growth of 13% with the consumer health division (CHD)
witnessing 11.4% growth. In the CHD segment, the company completed
the acquisition of the brand ‘Thirty Plus’ from Ajanta Pharma Ltd on May
3, 2011.
V a l u a t i o n
The stock is currently trading at 30.2x and 23.5x its FY12E and FY13E EPS
of | 3.5 and | 4.5, respectively. Though we expect the company’s topline
growth to be impressive, we maintain a cautious view on the growth in
margins and earnings in the domestic business. However, increasing
contribution of IBD could provide some relief to the margins as these
operate on higher margins than the domestic business. Hence, we
maintain out target price of | 113 with a HOLD rating.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
M a r g i n s t o r e m a i n u n d e r p r e s s u r e …
Dabur India’s (DIL) Q1FY12 results were in line with our expectations on
the topline front at | 1204.6 crore (I-direct estimate: | 1245.8 crore),
reporting a growth of 31.4% YoY. However, the margins disappointed on
account of substantial increase in raw material (RM) prices in FY11. The
RM cost to sales ratio increased ~500 bps YoY to 52.2% in Q1FY12 but a
rationalisation in the advertisement cost at 12.6% of net sales from 16.4%
of net sales in Q1FY11, helped the margin slippage to be moderate at 100
bps YoY and stood at 14.8% (Q1FY12) compared to 15.8% in the
corresponding quarter last year. In spite of subdued margins and higher
interest cost (| 12.6 crore compared to | 3.6 crore in Q1FY11), the robust
growth in topline helped the earnings to report a growth of 19.1% to |
127.7 crore.
ƒ Highlights of the quarter
DIL’s reported sales increase of 31.4% YoY was led by the inclusion of
sales of Hobi Kozmetik and Namasté LLC. Sales growth excluding these
acquisitions stood at 13.8% with the volume growth of 8.6%. Hence,
Namasté and Hobi contributed growth of 17.6% to the topline. DIL’s
international business excluding the acquisitions reported a sales growth
of 12.5% in value terms.
On a segment wise basis, the consumer care division (CCD) experienced
the highest growth of 13% with the consumer health division (CHD)
witnessing 11.4% growth. In the CHD segment, the company completed
the acquisition of the brand ‘Thirty Plus’ from Ajanta Pharma Ltd on May
3, 2011.
V a l u a t i o n
The stock is currently trading at 30.2x and 23.5x its FY12E and FY13E EPS
of | 3.5 and | 4.5, respectively. Though we expect the company’s topline
growth to be impressive, we maintain a cautious view on the growth in
margins and earnings in the domestic business. However, increasing
contribution of IBD could provide some relief to the margins as these
operate on higher margins than the domestic business. Hence, we
maintain out target price of | 113 with a HOLD rating.
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