Dabur India Ltd. share price target

by 12% volume growth. However, the international market had a weak quarter, leading to an in-line performance overall with 10% earnings growth. Margins were adversely affected by inflation in the commodity basket, unfavorable currency movements, and higher promotional expenses in the international market. Although domestic margins are expected to see a recovery, headwinds in the...

Dabur has two divisions in India - Consumer care division and Foods division, apart from its international operations.

Consumer care segment grew 10% YoY while foods segment increased marginally by 2.3% YoY, impacted by a shift of festival season from Q2 last year to Q3 this year. Consumer care segment growth was led by hair oil growth of 11.1%, shampoos category growth of 49%, home care growth of 10.9%, skin care growth of 11.9% and healthcare segment growth of 10.6% EBITDA margins declined 22 bps YoY to 21.2% as raw material costs to sales and employee expenses to sales increased 75 bps and 63...

We expect Dabur to deliver revenue/EBITDA/APAT of 14/18/20% CAGR over FY18-FY21E. We value Dabur at 38x P/E on Sep-20EPS to arrive at a TP of Rs 467 (Rs 484 earlier). Maintain BUY. Daburs performance was weaker in terms of volume growth and margins vs. our and streets expectations. Domestic volumes grew by 8% (7% in 2QFY18) vs. exp. of 10%. Higher promotional spend and muted price hike led to 8.6% domestic revenue growth (14% exp.). Gross margin pressure attributed due to delay in price hike, higher promotional spend & rising commodity inflation (trend prevalent across the sector). EBITDA/APAT grew by 7/4% (exp. of 18/13%).

Management is focusing on (1) Driving innovation and renovation for market leadership, (2) Regionalisation to be moreconsumer centric, (3) Channel focus strategy, (4) Cost optimization with improving service levels and (5) Capability improvement. Dabur's large share of product portfolio caters to this consumer shift (fruit juices included in naturals wave). We increase our EPS by ~4% for FY19-21E. We expect Dabur to deliver revenue/EBITDA/APAT of 15/21/24% CAGR over FY18-FY21E. We value Dabur at 38x P/E to 2-year forward EPS to derive TP of Rs 498 (earlier Rs 461). Maintain BUY. We recently interacted with the management of Dabur and got an opportunity to meet the new India CEO (Mohit Malhotra). Dabur is being opportunistic of taking advantage of consumer preference shifting towards naturals/Ayurvedic space.

With improving visibility in the domestic business, we upgrade our target P/E multiple to 38x (35x earlier) on Jun-20EPS to arrive at a TP of Rs 461 (Rs 423 earlier). Maintain BUY. Dabur reported an all-round solid performance with 20% consolidated revenue growth. Domestic revenues grew by 24% aided by 21% domestic volume growth, ahead of our (14/12% val/vol.) and streets expectations. International business (30% mix) grew by 11% (exp. of 14%). EBITDA/APAT was up by 25/19% (exp. 20/18%) despite aggressive ASP Growth of 33%.

Dabur reported 16.2% YoY growth in consolidated net sales of | 2,080.7 crore (I-direct estimate: | 2,048.7 crore; on a comparable basis, consolidated net sales grew 19.6%). The company reported domestic revenue growth of 24.7% led by 21% volume growth (Idirect estimate: 10%) during the quarter. International business reported growth of 10.5% in constant currency terms The consumer care segment grew 19.4% YoY while the foods segment increased 19.1% YoY. The strong consumer care growth was led by oral care growth of 17.3%, hair oil growth of 18.8%,...

1 August 2018 (19.6% on by underlying volume growth of 21% YoY (highest ever for a quarter; our (10.5% in CC terms). 19.3%), led by gross margin expansion of 70bp YoY to 49.6% and lower other expense (-120bp YoY to 10.7% of sales) and staff costs (-60bp YoY to 10.8%). Higher ad spends (+120bp YoY to 9.6%), however, restricted the expansion. (1) Rural wholesale is doing very well and was up 24% YoY while urban wholesale grew only 8% YoY; (2) Gross margins are unlikely to expand for the rest of the year owing to material cost increases. Changes to the model have resulted in reduction of 5.4%/2.7% in FY19E/FY20E EPS. Rural recovery is playing out well for DABUR but some of the sheen will be taken off by absence of any substantial and sustained recovery in the overseas businesses, which are one-third of sales.

Stellar 21% domestic volume growth; best among peers: Dabur's comparable domestic sales grew by 25%, 9% ahead of our estimates. Volume grew strongly by 21%, exceeding our expectation, indicating pick-up in wholesale channel, improved demand and market share gains. Volume growth was broad-based, as HPC/ Healthcare/Beverages grew by 20%/23%/27%. Toothpaste grew by 17% on a high base of 10%, extending its market share gain. Despite 31% increase in advertising spends, EBITDA grew by 35% (2% ahead of our estimate). Lower other income resulted in PAT growth of 25%. International business continues to recover: International business grew by 11.5%...

We factor revenue/PAT CAGR of 13%/14.7% over FY18-20E driven by uptick in rural demand, new product launches and market share gains. We upgrade the stock to BUY as Dabur with its wide product portfolio and distribution reach is well placed to capitalize on recovery in rural demand. We...