Dabur India - Index Analysis

BSE Index Analysis, Securties , Standard Experts 

Dabur India : 

 500096‎ - Dabur India Ltd. (BSE)

Revenue Improving But Operating Metrics Weak

Reco : Hold    

Cmp : 112    

Target : 118

Dabur India Q4FY12 performance was mixed with above estimate revenue growth (23% YoY vs. estimate of 18%) and weak operating performance (EBITDA margin at 15.8% vs. 18% estimated). Adjusted PAT grew 16% YoY (vs. 17% estimated) to Rs 1.7 bn helped by lower financial costs during the quarter.

Growth recovery continues: Domestic revenue grew 19% YoY driven by above estimate growth in volume (10% vs. 5% in Q2FY12 and 8% in Q3FY12). 

Key driver for revival in volume growth were: 

(a) Completion of distribution restructuring across verticals, 

(b) new rural distribution structure that has been rolled out in 10 states (constituting 80% of Dabur rural revenue), and 

(c) Surprisingly strong performance in categories such as Shampoos (up 16% YoY) and Foods (up 30% YoY).

Margin at trough level on severe cost pressure: Consolidated EBITDA margin contracted 280 bps to 15.8%. Volume growth focus of management led to 

(a) insufficient price increases (7% YTD) to offset the severe input cost inflation, leading to 610 bps YoY decline in gross margin and 

(b) higher brand spends (up 190 bps YoY).