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Dabur India 3QFY2014 performance highlights and results update

January 27, 2014, Monday, 05:31 GMT | 00:31 EST | 10:01 IST | 12:31 SGT
Contributed by Angel Broking

For 3QFY2014, Dabur India (Dabur) posted a 16.8% and 15.4% yoy growth in its consolidated top-line and bottom-line respectively. The domestic FMCG business’ volume growth continued to remain healthy at 9% on a yoy basis.
Key highlights: For 3QFY2014 Dabur’s consolidated net sales rose 16.8% yoy to Rs.1,904cr and was in-line with our estimates. The growth in the top-line was aided by volume growth of 9.2% and price hikes undertaken by the company. The domestic FMCG business grew by 14% yoy, aided by healthy growth in health supplements (up 19.5% yoy), and in digestive (up 17.7% yoy) and home care (up 16% yoy) segments. The international business grew by 26% yoy, aided by good performance in GCC, Egypt and Nigeria. However, the company posted a lower-than-estimated OPM, which fell by 115bp yoy to 15.4%, due to higher advertising (up 80bp yoy as a % of sales) and staff costs. As per the Management, advertising expenses rose on account of new product launches such as Dabur Ratnaprash, Vatika Enriched Oilve Hair Oil, Odonil 1 Touch Air Fresheners and a new herbal shampoo for the south India market.
Outlook and valuation: We expect Dabur’s top-line to post a ~15.0% CAGR over FY2013–15E. 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 is trading at 25.7x FY2015E EPS. We maintain our Neutral view on the stock.