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.
|As a % of net sales||Q1 FY13||Q1 FY12||bps yoy||Q4 FY12||bps qoq|
- 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).
|(Rs m)||Q1 FY13||Q1 FY12||% yoy||Q4 FY12||% qoq|
|Purchase of FG||(1,456)||(1,158)||25.7||(898)||62.1|
|OPM (%)||14.1||14.8||(67) bps||15.8||(169) bps|
|Effective tax rate (%)||19.6||20.1||-||18.1||-|
|Adj. PAT margin (%)||10.6||10.6||(5) bps||12.5||(195) bps|
|Ann. EPS (Rs)||3.5||2.9||20.7||3.9||(9.5)|
|Y/e 31 Mar (Rs m)||FY11||FY12||FY13E||FY14E|
|yoy growth (%)||21.1||29.3||16.8||16.4|
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