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Dabur India 2QFY2013 performance highlights and results update

Contributed by Angel Broking

For 2QFY2013, Dabur India (Dabur) posted a 20.6% yoy growth in its top-line to Rs.1,523cr, driven by a mix of volume and value growth. The company’s net profit rose by 16.4% to Rs.202cr aided by a reasonably strong operational performance.

Key highlights: Dabur posted a 20.6% yoy growth in net sales to Rs.1,523cr, which was in line with our estimates. The domestic consumer business reported a growth of 15.3%, driven by a mix of volume and price increases, with the volume growth coming in at around 9%. During the quarter, the domestic sales were affected due to lower procurement by canteen sales division (CSD) due to budget rationalization. The international business grew by 24.8% yoy during the quarter. The growth in the international business was aided by translation gains due to INR depreciation. On a constant currency terms international business rose by 16% yoy. Although the gross margin improved by 56bp yoy due to the cooling of raw material prices, the company’s advertising expenses went up by 175bp on a yoy basis, resulting in the OPM contracting by 137bp.

Outlook and valuation: We expect Dabur’s top-line to post a ~15.9% CAGR over FY2012–14E. The bottom-line is expected to post an 18.9% CAGR, aided by topline growth and margin expansion. At the current market price, the stock is trading at 23.8x FY2014E EPS. We recommend Neutral on the stock.