IGI Logo

All-round performance in Q4; Outlook positive

Dabur India Ltd (Dabur), a leading Indian FMCG company, is a world leader in Ayurveda with a portfolio of over 250 Herbal/Ayurvedic products. The company operates through Health Supplements, Digestives, Shampoos, Hair Oils, Skin Care, Oral Care, Foods and Other OTC & Ethical products.

* Q4FY21 sales grew 25.3% YoY, on strong demand-driven growth in Healthcare, Home & Personal Care and Food & Beverage businesses.

* Despite stable EBITDA margin of 18.9%, EBITDA rose 25.6% YoY on robust topline growth. Resultantly, PAT also grew 25.5% YoY.

* Amidst the second wave of pandemic, the company has taken adequate precautions in terms of inventory management and is well placed to tackle any potential supply chain disruptions. We expect company’s growth momentum to continue aided by robust demand, and hence reiterate our BUY rating on the stock with a revised TP of Rs. 612 based on 50x FY23E adj. EPS.

Strong product traction aids topline growth

Q4FY21 revenue surged 25.3% YoY to Rs. 2,337cr, led by strong growth in both domestic (+30.3% YoY) and International businesses (+19.4% YoY). In domestic healthcare segment, OTC rose 34.0% YoY led by growth in Lal Tail and Shilajit. Digestives revenue went up 20.0% YoY aided by growth in Pudin Hara, while Health supplements grew 17.7% YoY due to higher sales of Chyawanprash and honey. Ethicals revenue increased 39.1% YoY on distribution expansion, and innovations.

Under Home and Personal Care, oral care grew 42.1% YoY with strong demand in red toothpaste, Meswak, and Babool. Shampoo and Hair oils witnessed strong growth of 33.4% and 24.6% YoY, respectively. Home Care revenue rose 24.3% YoY on growth in Odonil and Odomos. Under F&B, Beverages grew 27.1% YoY on strong traction in juices, nectar and still drinks. Foods rose 36.1% YoY supported by Hommade brand, chutneys, and pickles. International business reported constant currency growth in Bangladesh (+46.7% YoY), MENA (+24.1%), SSA (+22.0%) and Egypt (+21.9%).

Robust sales supports profitability

While EBITDA margin remained stable YoY at 18.9%, overall EBITDA rose 25.6% YoY to Rs. 442cr, primarily driven by higher sales, partially offset by higher input prices, and employee and other expenses. As a result, Adj. PAT also increased 25.5% YoY to Rs. 378cr, due to higher operating profit and other income.

Key concall highlights

* Focusing on innovation in consumer products, Dabur recently launched Vatika Select shampoo with ingredients like Moroccan argan and red onion seeds.

* Company plans to invest around Rs. 550cr over the next 4-5 years on its new Greenfield facility in Central India for its healthcare business.

* Management guided double digit value growth for FY22 on the back of expected high single digit growth in volumes and a price increase of ~3%.

Valuation

Company is prepared for extended lockdown by keeping high levels of inventory to support traction in newly launched products. Healthcare products are set to witness strong performance over medium term, as customers focus on immunity booster and healthy lifestyle. Rural segment is less likely to be impacted from lockdown with support from government stimulus. We expect company’s growth momentum to continue aided by robust demand and hence reiterate our BUY rating on the stock with a revised target price of Rs. 612 based on 50x FY23E adj. EPS.

To Read Complete Report & Disclaimer Click Here

Please refer disclaimer at www.geojit.com
SEBI Registration number is INH200000345

Above views are of the author and not of the website kindly read disclaimer