Dabur India 4Q FY 2013

7/30/2019 Dabur India 4Q FY 2013

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Please refer to important disclosures at the end of this report 1

Quarterly Data (Consolidated)(` cr) 4QFY13 4QFY12 % yoy 3QFY13 % qoqRevenue 1,531 1,364 12.3 1,631 (6.1)EBITDA 260 215 20.9 269 (3.3)

OPM (%) 17.0 15.8 121bp 16.5 49bp

PAT 201 171 17.6 211 (5.0)

Source: Company, Angel Research

For 4QFY2013, Dabur India (Dabur) posted a 12.3% yoy growth in its

consolidated top-line. The companys net profit rose by 17.6% yoy to `201cr,

in-line with estimates, aided by strong operational performance.

Key highlights: The domestic consumer business posted a 15.1% yoy growthwith volume growth coming in at 12.3%. In terms of category, Foods grew by

22.6% yoy while Home care grew by 33.3% yoy. The Hair care portfolio grew by

9.6% yoy, with Shampoos growing by 29.4% yoy. The companys international

business posted a growth of 11.6%, with the organic international business

posting a growth of 19.7% yoy. The OPM stood at 17.0%, up 121bp yoy, led

by a healthy expansion in gross margins due to reduction in commodity costs

and also lower advertising and promotion expenditure as a percentage of saleswhich fell by 90bp yoy to 12.5%. Finance costs rose by 161.9% yoy to `15cr.

Outlook and valuation: We expect Daburs top-line to post an ~16.5% CAGRover FY201315E. The bottom-line is expected to post a 19.5% CAGR, aided by

top-line growth and margin expansion. At the current market price, the stock istrading at 25.1x FY2015E EPS. We recommend Neutral on the stock.Key Financials (Consolidated)Y/E March (` cr) FY2012 FY2013E FY2014E FY2015ENet sales 5,284 6,146 7,183 8,340% chg 28.5 16.3 16.9 16.1

Net profit (Adj.) 644 770 939 1,099% chg 12.4 19.6 21.8 17.1

EBITDA (%) 16.4 16.3 16.8 16.8

EPS (`) 3.7 4.4 5.4 6.3P/E (x) 42.6 35.8 29.4 25.1

P/BV (x) 16.0 12.9 11.5 8.9

RoE (%) 41.4 40.1 41.5 40.1

RoCE (%) 28.7 28.7 32.5 34.8

EV/Sales (x) 5.2 4.5 3.8 3.3

EV/EBITDA (x) 31.9 27.8 22.9 19.5


NEUTRALCMP `158

Target Price -

Investment Period -

Stock Info

Sector

Net Debt (`cr) 137

Bloomberg Code DABUR@IN

Shareholding Pattern (%)

Promoters 68.7

MF / Banks / Indian Fls 5.1

FII / NRIs / OCBs 19.9

Indian Public / Others 6.3

Abs. (%) 3m 1yr 3yr

Sensex (0.5) 16.9 15.8

Dabur 18.4 47.6 67.3

Reuters Code DABU.BO

BSE Sensex 19,674

Nifty 5,971

Avg. Daily Volume 134,348

Face Value (`) 1

Beta 0.2

52 Week High / Low 162/101

FMCG

Market Cap (`cr) 27,495

V Srinivasan022-39357800 Ext: 6831

[email protected]

Dabur IndiaPerformance Highlights

4QFY2013 Result Update | FMCG

May 6, 2013


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Dabur India | 4QFY2013 Result Update

May 6, 2013 2

Exhibit 1:Quarterly Performance (Consolidated)Y/E March (` cr) 4QFY13 4QFY12 % yoy 3QFY13 % qoq FY2013 FY2012 % chgNet Sales 1,531 1,364 12.3 1,631 (6.1) 6,146 5,283 16.3Consumption of RM 740 685 8.0 795 (7.0) 3,019 2,692 12.1(% of Sales) 48.3 50.2 48.8 49.1 51.0

Staff Costs 121 96 26.4 123 (1.7) 471 387 21.6

(% of Sales) 7.9 7.0 7.5 7.7 7.3

Advertising 192 182 5.4 235 (18.3) 837 660 26.9

(% of Sales) 12.5 13.4 14.4 13.6 12.5

Other Expenses 218 186 17.4 208 4.8 823 676 21.8

(% of Sales) 14.2 13.6 12.8 13.4 12.8

Total Expenditure 1,271 1,148 10.7 1,361 (6.7) 5,151 4,415 16.7Operating Profit 260 215 20.9 269 (3.3) 995 868 14.7OPM 17.0 15.8 121bp 16.5 49bp 16.2 16.4 (23)

Interest 15 6 161.9 8 92.5 59 54 9.4

Depreciation & Amortisation 28 29 (4.0) 31 (7.7) 112 103 8.9

Other Income 36 28 26.8 27 30.2 124 80 56.1

PBT (excl. Extr Items) 253 208 21.3 258 (2.1) 948 790 20.0Extr Income/(Expense) - - - - -

PBT (incl. Extr Items) 253 208 21.3 258 (2.1) 948 790 20.0(% of Sales) 16.5 15.3 15.8 15.4 15.0

Provision for Taxation 51 38 34.4 48 6.1 183 146 24.8

(% of PBT) 20.1 18.1 18.5 19.3 18.5

PAT (Before Minority) 202 171 18.4 210 (4.0) 766 644 18.9Minority Interest 1.5 0.0 (0.6) 2.4 (0.8)

Reported PAT 201 171 17.6 211 (5.0) 763 645 18.4PATM 13.1 12.5 12.9 12.4 12.2

Equity shares (cr) 174 174 174 174 174

FDEPS (`) 1.2 1.0 17.6 1.2 (5.1) 4.4 3.7 18.4Source: Company, Angel Research

Exhibit 2:4QFY2013 Actual vs Angel estimates(` cr) Actual Estimates Variation (%)Net Sales 1,531 1,581 (3.1)

Operating Profit 260 251 3.6

OPM (%) 17.0 15.9 110bp

Net Profit 201 202 (0.7)



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May 6, 2013 3

Top-line up 12.3% yoy

Dabur posted a strong top-line growth of 12.3% yoy to `1,531cr.Volume growth

in the domestic Consumer business stood at 12.3%. In terms of category, Foods

grew by 22.6% yoy while Home care grew by 33.3% yoy. The Hair care portfolio

grew by 9.6% yoy, with Shampoos growing by 29.4% yoy. The companys

international business posted a growth of 11.6%, with the organic international

business posting a growth of 19.7% yoy. The companys international business

posted an 11.6% yoy growth, impacted by compression in Namastes (a

subsidiary of Dabur) operations in USA due to restructuring of the brand. The

restructuring exercise is now complete with Organic Root Stimulator getting

rebranded as ORS. The Management expects the Namaste business to

rebound in FY2014. Daburs other subsidiary Hobi performed well aided by

continued investment behind brands. The organic international business

posted a healthy growth of 19.7% yoy, with constant currency growth comingin at 12.9%.

Exhibit 3:Top-line grows 12.3% yoy


Exhibit 4:Volume growth at 12.3% yoy


Gross margin expands 190bp yoy, OPM up 121bp yoy

The companys OPM for the quarter stood at 17.0% up 121bp yoy led by a healthy

expansion in gross margins due to reduction in commodity costs. Gross margin for

the company rose by 190bp on a yoy basis. The companys advertising and

promotion expenditure as a percentage of sales fell by 90bp yoy to 12.5%. The

Consumer care business posted an 18.6% yoy growth in profit to `295cr.

However, the profits of the Foods business declined by 3.5% yoy to `30cr due to

increase in input costs.

Net profit grows by 17.6% yoy

Daburs reported net profit for the quarter grew 17.6% yoy to `201cr, aided by a

strong operational performance. Finance costs rose by 161.9% yoy to `15cr. Tax

rate rose by 200bp yoy to 18.1%.

1,1

08

1,2

05

1,2

62

1,4

53

1,3

64

1,4

62

1,5

23

1,6

31

1,5

31

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200

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4Q11

1Q12

2Q12

3Q12

4Q12

1Q13

2Q13

3Q13

4Q13

(yoy%)

(`cr)

Top-line (LHS) yoygrowth (RHS)

12.7

8.6

10.010.8

12.4

11.0

9.09.5

12.3

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14.0

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1Q12

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3Q12

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2Q13

3Q13

4Q13

(%)


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May 6, 2013 4

Exhibit 5: OPM up by 121bp yoy


Exhibit 6:Healthy 17.6% yoy growth in Net Profit


Exhibit 7:Segment-wise performance (Consolidated)Y/E Mar (` cr) 4QFY13 4QFY12 % chg 3QFY13 % chg FY13 FY12 % chgTotal Net Sales 1,531 1,364 12.3 1,631 (6.1) 6,146 5,283 16.3Consumer Care 1,290 1140 13.1 1,414 -8.8 5,142 4,490 14.5

Foods Business 192.7 161.3 19.4 164.9 16.8 745 602 23.7

Retail 15.8 12.25 29.2 16.8 -5.5 60 42 41.5

Others 32.9 50.0 (34.2) 35.4 -7.1 200 149 105.9

Total PBIT 326 277 17.4 339 (3.9) 1268 1075 18.0Consumer Care 295.0 248.7 18.6 323.6 -8.8 1148 968 18.6

Foods Business 30.2 31.3 (3.5) 18.1 66.5 115 111 3.6

Retail (1.4) (2.9) - (2.7) - (10) (12) 0.0

Others 2.0 0.5 284.6 0.1 1438.5 15 7 103.4

PBIT Margin (%) 21.3 20.4 20.8 20.6 20.3Consumer Care 22.9 21.8 22.9 22.3 21.6

Foods Business 15.7 19.4 11.0 15.4 18.4

Retail (8.8) (23.9) (16.4) (15.9) (27.4)

Others 6.1 1.0 0.4 7.5 4.9


19.114.2

18.715.2 15.8 14.1

17.4 16.5 17.0

53.0

47.850.0 49.0 49.8 50.0 50.6

51.2 51.7

11.5 12.6 10.113.6 13.4

15.711.9

14.4 12.5

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10.0

20.0

30.0

40.0

50.0

60.0

4Q11

1Q12

2Q12

3Q12

4Q12

1Q13

2Q13

3Q13

4Q13

(%)

OPM Gross margin A&P Spends/Sales

147

128

174

173

171

149

202

211

201

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25.0

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60

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260

4Q11

1Q12

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3Q12

4Q12

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2Q13

3Q13

4Q13

(yoy%)

(`cr)

PAT (LHS) yoy growth (RHS)


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May 6, 2013 5

Investment rationale

Niche positioning to drive growth: Daburs niche ayurvedic/herbal basedpositioning offers it an attractive and unique proposition in terms of product

portfolio. We believe this niche positioning will drive the companys growth

going ahead.

Acquisition rationale: The acquisition of Hobiand Namaste groups providesDabur entry into an attractive new market. The integration of Hobi Group and

Namaste Group is complete and their portfolio has been extended across

geographies.

Outlook and valuation

We expect Daburs top-line to post an ~16.5% CAGR over FY201315E. The

bottom-line is expected to post a 19.5% CAGR over the same period, aided bytop-line growth and margin expansion. At the current market price, the stock istrading at 25.1x FY2015E EPS. We recommend Neutral on the stock.

Exhibit 8:PeervaluationCompany Reco Mcap CMP TP Upside P/E (x) EV/Sales (x) RoE (%) CAGR #

(` cr) (`) (R`) (%) FY14E FY15E FY14E FY15E FY14E FY15E Sales EPSAsian Paints Neutral 46,576 4,856 - - 33.8 28.5 3.4 2.7 35.0 32.7 18.8 18.0

Britannia Neutral 6,904 578 - - 28.5 23.0 1.0 0.8 37.4 37.3 15.5 22.0

Colgate Neutral 20,551 1,511 - - 33.8 29.1 5.5 4.7 98.3 88.0 15.1 17.4

Dabur Neutral 27,455 158 - - 29.4 25.1 3.8 3.1 41.5 40.1 16.5 19.5GCPL Neutral 28,209 829 - - 31.3 26.0 3.7 3.1 26.5 25.9 18.8 22.2

GSKCHL* Neutral 16,997 4,042 - - 33.5 27.6 4.3 3.4 33.7 33.4 17.6 18.7

HUL Neutral 123,976 573 - - 33.6 31.2 4.1 3.5 113.4 87.0 14.7 11.7

ITC Neutral 255,114 326 - - 29.4 25.1 7.2 5.8 35.5 34.1 15.3 16.6

Marico Neutral 14,087 219 - - 27.6 22.3 2.6 2.1 22.8 22.9 14.8 23.3

Nestle* Neutral 47,162 4,891 - - 37.2 30.6 4.7 4.0 58.8 69.5 16.7 18.4

Tata Global Neutral 9,121 148 - - 18.7 16.9 1.0 0.5 9.5 9.8 10.0 13.0

Source: Company, Angel research; Note: # Denotes CAGR over FY2013-15E, *December Year Ending.


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Exhibit 9:One year forward PE

Source: Company, Angel Research Note: Blue line indicates 5 year average PE

Company Background

Dabur is a leading Indian FMCG company, offering products in the hair oil,

shampoo, oral care, home care, skin care, foods and healthcare categories. The

company has many iconic brands such as Dabur, Vatika, Hajmola, Real and Fem.

The company has 17 manufacturing facilities, with a presence in over 60 countries.

The company is currently headed by Mr Sunil Duggal.

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5.0

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35.040.0

45.0

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9

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3

(x)


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May 6, 2013 7

Profit & Loss Statement (Consolidated)

Y/E March (` cr) FY2010 FY2011 FY2012 FY2013 FY2014E FY2015ETotal operating income 3,390 4,077 5,325 6,196 7,183 8,340% chg 20.9 20.3 30.6 16.4 15.9 16.1Total Expenditure 2,761 3,341 4,415 5,146 5,979 6,941

Cost of Materials 1,551 1,938 2,685 3,019 3,441 3,995

Advertising Exp 493 535 660 837 1,006 1,168

Personnel 285 309 387 471 567 659

Others 432 561 683 819 965 1,120

EBITDA 629 736 910 1,050 1,204 1,399% chg 33.7 17.0 23.6 15.4 14.7 16.2

(% of Net Sales) 18.6 18.1 17.1 16.9 16.8 16.8

Depreciation& Amortisation 56 82 103 112 112 130

EBIT 573 654 807 937 1,092 1,269% chg 36.0 14.2 23.3 16.2 16.5 16.2

(% of Net Sales) 16.9 16.0 15.1 15.1 15.2 15.2

Interest & other Charges 20 30 54 59 48 38

Other Income 48 55 79 124 129 142

(% of PBT) 8.8 10.5 8.0 8.1 9.5 12.4

Share in profit of Associates - - - - - -

Recurring PBT 601 679 832 1,003 1,173 1,373% chg 35.1 13.0 22.6 20.5 17.0 17.1

Prior Period & Extr. Exp./(Inc.) 2 - - 5 - -

PBT (reported) 599 679 832 998 1,173 1,373Tax 100 139 146 183 235 275

(% of PBT) 16.7 20.5 17.6 18.2 20.0 20.0

PAT 498 540 686 816 939 1,099Less: Minority interest (0.8) 0.3 (0.8) 2.4 (0.8) 0.3

Recurring PAT 501 540 687 818 939 1,098% chg 28.1 7.7 27.2 19.1 14.9 16.9

(% of Net Sales) 14.8 13.2 12.9 13.2 13.1 13.2

Basic EPS (`) 5.8 3.3 3.7 4.4 5.4 6.3Fully Diluted EPS ( ) 2.9 3.3 3.7 4.4 5.4 6.3% chg 28.1 14.3 12.6 19.1 21.9 17.1


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May 6, 2013 8

Balance Sheet (Consolidated)

Y/E March (` cr) FY2010 FY2011 FY2012 FY2013E FY2014E FY2015ESOURCES OF FUNDSEquity Share Capital 87 174 174 174 174 174Preference Capital - - - - - -

Reserves& Surplus 848 1,217 1,543 1,950 2,225 2,912

Shareholders Funds 935 1,391 1,717 2,124 2,399 3,086Minority Interest 4 4 3 12 12 12

Total Loans 179 1,051 1,123 1,151 951 751

Deferred Tax Liability 11 19 27 36 36 36

Total Liabilities 1,129 2,465 2,871 3,324 3,399 3,886APPLICATION OF FUNDSGross Block 986 1,934 2,145 2,229 2,660 3,089

Less: Acc. Depreciation 339 435 503 616 727 857

Net Block 647 1,499 1,641 1,613 1,933 2,232Capital Work-in-Progress 30 32 27 61 67 77

Investments 264 420 483 632 732 832Long term loans and adv. 433 300 300 301Current Assets 1,106 1,871 2,400 2,430 2,989 3,358

Cash 192 280 448 513 610 619

Loans & Advances 367 467 154 230 523 632

Other 546 1,064 1,286 1,328 1,556 1,807

Current liabilities 920 1,458 1,751 1,412 2,322 2,613

Net Current Assets 186 413 648 1,018 668 745Mis. Exp. not written off 3 101 72 - - -

Total Assets 1,129 2,465 2,871 3,324 3,399 3,886


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May 6, 2013 9

Cash flow statement (Consolidated)

Y/E March (` cr) FY2010 FY2011 FY2012 FY2013E FY2014E FY2015EProfit before tax 601 712 790 953 1,173 1,373

Depreciation 56 82 103 112 112 130Change in Working Capital (48) (135) (66) (376) 345 (68)

Interest / Dividend (Net) 12 10 5 19 7 (3)

Direct taxes paid 100 139 146 183 235 275

Others (11) 35 (33) 206 (153) (5)

Cash Flow from Operations 510 565 653 732 1,250 1,153(Inc.)/ Dec. in Fixed Assets (134) (950) (205) (119) (437) (439)

(Inc.)/ Dec. in Investments (104) (156) (63) (149) (100) (100)

Cash Flow from Investing (238) (1,106) (268) (268) (537) (539)Issue of Equity (14) - 12.33 0.08 - -

Inc./(Dec.) in loans (51) 872 72 28 (200) (200)

Dividend Paid (Incl. Tax) 151 233 297 408 408 408

Interest / Dividend (Net) 12 10 5 19 7 (3)

Cash Flow from Financing (228) 629 (218) (399) (615) (605)Inc./(Dec.) in Cash 44 88 168 65 98 8

Opening Cash balances 148 192 280 448 513 610Closing Cash balances 192 280 448 513 610 619

Note: Some of the figures from FY2011 onwards are reclassified; hence not comparable withprevious year numbers


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May 6, 2013 10

Key ratios (Consolidated)

Y/E March FY2010 FY2011 FY2012 FY2013 FY2014E FY2015EValuation Ratio (x)P/E (on FDEPS) 54.8 48.0 42.6 35.8 29.4 25.1P/CEPS 24.6 41.9 36.8 31.1 26.2 22.4

P/BV 14.7 19.7 16.0 12.9 11.5 8.9

Dividend yield (%) 1.3 0.7 1.0 1.3 1.3 1.3

EV/Sales 8.1 6.9 5.2 4.5 3.8 3.3

EV/EBITDA 43.7 36.7 31.9 27.8 22.9 19.5

EV / Total Assets 24.3 11.5 9.7 8.4 8.1 7.0

Per Share Data (`)EPS (Basic) 5.8 3.3 3.7 4.4 5.4 6.3

EPS (fully diluted) 2.9 3.3 3.7 4.4 5.4 6.3

Cash EPS 6.4 3.8 4.3 5.1 6.0 7.0

DPS 2.0 1.2 1.5 2.0 2.0 2.0

Book Value 10.8 8.0 9.9 12.2 13.8 17.7

Returns (%)RoCE 52.3 38.2 28.7 28.7 32.5 34.8

Angel RoIC (Pre-tax) 51.6 35.4 27.1 27.4 31.2 33.5

RoE 57.1 49.3 41.4 40.1 41.5 40.1

Turnover ratios (x)Asset Turnover 3.4 2.1 2.5 2.5 2.7 2.7

Inventory / Sales (days) 46 63 57 49 49 49

Receivables (days) 13 32 32 30 30 30

Payables (days) 50 66 64 70 58 58

Net Working capital (days) (1) 12 14 30 3 6


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May 6, 2013 11

Research Team Tel: 022 - 39357800 E-mail: [email protected] Website: www.angelbroking.com

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Disclosure of Interest Statement Dabur India

1. Analyst ownership of the stock No

2. Angel and its Group companies ownership of the stock No

3. Angel and its Group companies' Directors ownership of the stock No

4. Broking relationship with company covered No

Ratings (Returns): Buy (> 15%) Accumulate (5% to 15%) Neutral (-5 to 5%)Reduce (-5% to -15%) Sell (< -15%)

Note: We have not considered any Exposure below `1 lakh for Angel, its Group companies and Directors

Dabur India 4Q FY 2013

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