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Dabur India (BOM:500096) |
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WIKI ANALYSIS
Dabur is India’s fourth largest FMCG company with interests in health care, personal care and food products. The company’s name is generic to ‘ayurvedic’ products in India and it has big brands like Vatika (hair oils), Chyawanprash, Hajmola, Amla oil and Lal Dant Manjan in its stable. In FY04, Dabur approved the demerger of its FMCG and pharma businesses into two separate listed entities. The move was aimed at bringing in more focus to both businesses, as well as to unlock value for shareholders. Further, the company acquired Balsara’s business in FY05 for a consideration of Rs 1.4 bn and Fem Care Pharma in June 2009 for Rs.2.5 bn.
Dabur reported an enticing topline growth of 19% YoY driven by growth in the consumer care division (up 15% YoY), foods (21% YoY) and its international business, which registered a strong 40% YoY growth for FY09. Operating profit for the company fell by 0.5% this fiscal due to higher raw material costs which was partially offset by cost cutting measures undertaken by the company. Bottomline continued to outpace topline growing by 32% YoY, which was possible due to savings from fiscal benefits from new manufacturing units and efficiencies. While the company has changed its product mix and revamped its portfolio along with judicious price increases, a sustained rise in raw material costs could hurt growth or margins or both.
Dabur’s broad product portfolio projects it as one of the best plays in the Indian FMCG space, not to forget its strong presence in less penetrated and high growth categories. Its ability to consistently launch new products and variants also gives it an edge. Further, its wide geographical reach is another strong advantage.
| Consolidated Financials | ||||||
| Rs(m) | 4QFY08 | 4QFY09 | (%) Change | FY08 | FY09 | (%) Change |
|---|---|---|---|---|---|---|
| Net sales | 6,163 | 7,363 | 19.50% | 23,850 | 28,310 | 18.70% |
| Expenditure | 5,087 | 6,022 | 18.40% | 19,517 | 23,351 | 19.60% |
| Operating profit (EBDITA) | 1,076 | 1,341 | 24.70% | 4,333 | 4,959 | 14.50% |
| EBDITA margin (%) | 17.50% | 18.20% | 18.20% | 17.50% | ||
| Other income | 40 | 43 | 7.80% | 100 | 213 | 112.10% |
| Interest | 35 | 83 | 135.00% | 168 | 232 | 38.20% |
| Depreciation | 117 | 144 | 22.90% | 421 | 492 | 17.00% |
| Profit before tax | 964 | 1,157 | 20.10% | 3,844 | 4,448 | 15.70% |
| Minority interest | (29) | (10) | (66.00%) | 1 | 4 | 215.40% |
| Tax | 139 | 106 | (23.90%) | 516 | 540 | 4.70% |
| Profit after tax/(loss) | 796 | 1,042 | 30.90% | 3,329 | 3,911 | 17.50% |
| Net profit margin (%) | 12.90% | 14.20% | 14.00% | 13.80% | ||
| No. of shares (m) | 864 | 865.1 | 864 | 865.1 | ||
| Diluted earnings per share (Rs)* | 4.5 | |||||
| Price to earnings ratio (x)* | 23.4 | |||||
| * based on 12 month trailing earnings | ||||||
| Consolidated segment Revenue | ||||||
| 4QFY08 | 4QFY09 | (%) Change | FY08 | FY09 | (%) Change | |
| Consumer Care segment | 4,636 | 5,568 | 20.10% | 18,642 | 22,071 | 18.40% |
| % of total revenue | 75.40% | 75.50% | 77.80% | 77.90% | ||
| Consumer Health segment | 582 | 677 | 16.30% | 1,788 | 2,123 | 18.80% |
| % of total revenue | 9.50% | 9.20% | 7.50% | 7.50% | ||
| Food | 757 | 929 | 22.80% | 2,975 | 3,351 | 12.60% |
| % of total revenue | 12.30% | 12.60% | 12.40% | 11.80% | ||
| Retail Business | 0 | 18 | 0 | 60 | ||
| % of total revenue | 0.00% | 0.20% | 0.00% | 0.20% | ||
| Others | 171 | 179 | 4.90% | 558 | 736 | 31.90% |
| % of total revenue | 2.80% | 2.40% | 2.30% | 2.60% | ||
| Total | 6,146 | 7,371 | 19.90% | 23,962 | 28,341 | 18.30% |
| Division performance | ||||||
| Segment | Growth | Key performers | ||||
|---|---|---|---|---|---|---|
| Hair oil | 20.60% | Dabur Amla (20.4%), Anmol Coconut (42.2%) , Vatika (12.2%), Anmol Mustard Oil (22.7%) | ||||
| Shampoo | 31.50% | Vatika brands | ||||
| Health Supplements | 11.00% | Chyawanprash (7.4% YoY), Glucose (21.6%) and Dabur Honey (12.6%) | ||||
| Baby and Skin care | 23.50% | Gulabari (40.6%), Lal Tail (19.6%) | ||||
| Oral care | 5.00% | Red toothpaste (21.4%), Meswak (17.2%) | ||||
| Home care | 10.00% | Odonil (6.5%), Sanifresh (32.1%) | ||||
| Foods | 14.00% | Real Fruit juice(14.9%), culinary range (19.6%) | ||||
| Digestives | 12.00% | Hajmola tablets (13.7%), Hajmola Candy (17.9% )} | ||||
Quarterly Result Analysis- September '09
Performance summary
- Consolidated net sales for 2QFY10 and 1HFY10 increased by a robust 22% YoY each on the back of strong consumer spending coupled with new products rollout.
- Operating (EBITDA) margins improved by 2.2% to 21.2% for 2QFY10. This increase comes on the back of fall in raw material costs, offset to some extent by increase in advertisement costs as a percentage of sales. Operating margins for 1HFY10 increased by 1.7% to 19%. This increase comes on the back of slower growth in raw material costs as compared to sales, once again offset to some extent by a growth in advertisement expense by 47%
- Net profit margins for 2QFY10 increased by 0.9% to 16.3% while the same for 1HFY10 increased by 0.8% to 14.3%. The increase is on the back of higher sales and operating profits offset by increase in tax expenses.
| Financial performance | ||||||
| (Rs m) | 2QFY09 | 2QFY10 | % Change | 1HFY09 | 1HFY10 | % Change |
|---|---|---|---|---|---|---|
| Net sales | 6,993 | 8,540 | 22.10% | 13104.5 | 16013 | 22.20% |
| Expenditure | 5,664 | 6,726 | 18.80% | 10832.1 | 12970 | 19.70% |
| Operating profit (EBDITA) | 1,329 | 1,814 | 36.40% | 2,272 | 3,043 | 33.90% |
| EBDITA margin (%) | 19.00% | 21.20% | 17.30% | 19.00% | ||
| Other income | 63.6 | 47.8 | (24.80%) | 111.5 | 79.4 | (28.80%) |
| Interest | 39.5 | 32.9 | (16.70%) | 79.8 | 69.7 | (12.70%) |
| Depreciation | 123.3 | 139.2 | 12.90% | 239.9 | 262.7 | 9.50% |
| Profit before tax | 1,230 | 1,690 | 37.30% | 2,064 | 2,790 | 35.20% |
| Minority Interest | 4 | (11) | 3 | (7) | ||
| Extraordinary Items | 0 | 0 | 0 | 0 | ||
| Tax | 156.1 | 287.1 | 83.90% | 282.9 | 477.4 | 68.80% |
| Profit after tax/(loss) | 1,074 | 1,402 | 30.60% | 1,781 | 2,313 | 29.80% |
| Net profit margin (%) | 15.40% | 16.40% | 13.60% | 14.40% | ||
| No. of shares (m) | 866 | 866 | 866 | 866 | ||
| Diluted earnings per share (Rs)* | 5.1 | |||||
| Price to earnings ratio (x)* | 30.5 | |||||
* On a trailing 12-months basis
What has driven growth in 1QFY10?
- Sales for the company increased on the back of strong volume growth across key categories.
- The company rolled out several new products during the quarter like Dabur Uveda range of Ayurvedic skin care products, Babool Mint Fresh Gel and Fem Herbal Bleach, Dabur Amla Flower Magic Hair Oil, Vatika enriched Almond Hair Oil and Dabur Total Protect Ayurvedic health shampoo which helped grow sales.
- The company’s overseas business performed strongly with a sales growth for 2QFY10 recorded at 27.5% YoY. Of the overseas markets, Nepal was the strongest performer with sales growth of 41.4% YoY. 36.8% YoY growth in sales was recorded in GCC while sales in Egypt grew by 35.3% YoY.
- Net profit for the quarter grew by 29% YoY due to higher tax expense which grew by 84%. This is due to some of the company’s manufacturing hubs coming out of the tax exemption period.
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