Dabur India (Q1 FY13)

India Infoline News Service | Mumbai |

Dabur recorded healthy 21% yoy growth in consolidated revenues at Rs14.6bn during Q1 FY13 - above our expectations of Rs13.9bn.

CMP Rs116, Target price Rs125, Upside 7.9%
 
  • Dabur recorded healthy 21% yoy growth in consolidated revenues at Rs14.6bn during Q1 FY13 - above our expectations of Rs13.9bn. The Hobi Group (in Turkey) and Namaste Group (in US) integration has completed and they are now part of Dabur International.

  • Domestic business revenues increased by 16.1% yoy to ~Rs10bn fuelled by strong growth across key categories like health supplements (18%), home care (14.4%), skin care (13.3%), OTC & Ethicals (12.7%) hair care (10.4%), digestives (9.8%) and oral care (8.1%) during Q1 FY13. Volume growth remained strong at ~12% (10% in Q4 FY12). Shampoo segment witnessed a revival with 23% yoy growth (on a low base).

  • Revenue growth in the international business including acquisitions remained strong at 24% yoy at ~Rs4.7bn led by strong performance in GCC (22%), Egypt (18%) and Nigeria (21%) businesses. The international business revenue growth could have been even better but for the slower growth in Yemen, Syria and Libya markets which are still impacted by political disturbance.

  • Operating margins for the quarter declined by 70bps to 14.1% due to steep 310bps increase in advertising cost. A 220bps drop in raw material cost restricted further margin erosion. Adjusted net profit for the quarter increased by 17% yoy to Rs1.5bn (below our expectations of Rs1.7bn) due to sharp increase in interest outgo (Rs213mn against Rs145mn in Q1 FY12) and an extraordinary loss of Rs49mn (one time charge) on account of sale of stake in Weikfield International (UAE). Dabur divested its 38.4% stake in Weikfield being a non core and loss making business.

Cost analysis
As a % of net sales Q1 FY13 Q1 FY12 bps yoy Q4 FY12 bps qoq
Material cost 50.0 52.2 (217) 50.2 (18)
Personnel cost 7.3 7.6 (32) 7.0 25
Advertising cost 15.7 12.6 310 13.4 233
Other overheads 12.9 12.9 5 13.6 (70)
Total costs 85.9 85.2 67 84.2 169
Source: India Infoline Research 
  • Dabur has a unique mix of seven diverse growth engines in the FMCG space, which have a potential of delivering strong revenue growth. While we remain positive on the company’s growth prospects, Dabur faces risk from increasing competition in some of its categories like hair oils, skin care, shampoos and slower growth in its international business profits. We expect Dabur to witness revenue and earnings CAGR of 16.6% and 19% respectively over FY12-14. At the current market price of Rs116, the stock is trading at 21.3x FY14E EPS of Rs5.4. Maintain Market Performer rating on the stock with a revised 9-mth price target of Rs125 (earlier Rs118).
Results table
(Rs m) Q1 FY13 Q1 FY12 % yoy Q4 FY12 % qoq
Net sales 14,620 12,046 21.4 13,636 7.2
Material cost (5,861) (5,132) 14.2 (5,951) (1.5)
Purchase of FG (1,456) (1,158) 25.7 (898) 62.1
Personnel cost (1,062) (913) 16.3 (956) 11.1
Advertising cost (2,292) (1,515) 51.3 (1,820) 25.9
Other overheads (1,888) (1,549) 21.9 (1,857) 1.7
Operating profit 2,061 1,779 15.9 2,153 (4.3)
OPM (%) 14.1 14.8 (67) bps 15.8 (169) bps
Depreciation (267) (248) 7.5 (293) (9.0)
Interest (213) (145) 46.6 (57) 271.7
Other income 342 216 58.1 280 22.0
PBT 1,923 1,602 20.1 2,083 (7.7)
Tax (378) (323) 17.1 (377) 0.1
Effective tax rate (%) 19.6 20.1 - 18.1 -
Minority interest (2) (2) 33.3 (0) -
Adjusted PAT 1,543 1,277 20.8 1,705 (9.5)
Adj. PAT margin (%) 10.6 10.6 (5) bps 12.5 (195) bps
Reported PAT 1,494 1,277 17.0 1,705 (12.4)
Ann. EPS (Rs) 3.5 2.9 20.7 3.9 (9.5)
Source: Company, India Infoline Research

Financial Summary

Y/e 31 Mar (Rs m) FY11 FY12 FY13E FY14E
Revenues 41,045 53,054 61,968 72,142
yoy growth (%) 21.1 29.3 16.8 16.4
Operating profit 7,625 8,902 10,473 12,336
OPM (%) 18.6 16.8 16.9 17.1
Pre-exceptional PAT <
BSE 348.00 [1] ([0.29]%)
NSE 347.85 [1.70] ([0.49]%)

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