Dabur India's Q4FY18 results (Outperformer) - Continued all round recovery!
Q4FY18 result highlights
- Consolidated revenues were up 6.2% yoy at Rs 20.3bn (est: Rs20.5bn), EBITDA was up 16.2% yoy at Rs 4.85bn(est: Rs4.7bn) and PAT was up 19% yoy at Rs 3.97bn (est Rs3.74bn).
- On comparable basis (adjusting for GST impact of 3.6% and currency impact of 1.3% yoy), consolidated revenues increased by 11.1% yoy. On comparable business (adjusting for GST impact of 5% yoy), domestic business sales grew by 10% yoy with a volume growth of 7.7% yoy.
- Consolidated gross margins increased 170bp (standalone gross margins were up 250bps yoy) aided by lower promotional cost and favourable product mix. Staff cost was up by 4.4% yoy. Other expenses grew by 6.3% yoy and A&P spends increased by 2.1% yoy (standalone A&P spends were up 5.4% yoy). Resultant EBITDA increased by 16.2% yoy with margin expansion of 210bps yoy (standalone margins increased by 220bps yoy). On comparable basis, consolidated EBITDA margins increased by 140bps yoy to 23.2%.
- Depreciation expense increased by 7.7% yoy while tax rate was down 170bps yoy resulting in consolidated PAT growth at 19% yoy.
- International business saw strong growth of 16.8% yoy on constant currency basis led by GCC, Egypt and SAARC markets
Key positives: Strong volume growth. Sharp recovery in international business
Key negatives: Continued weakness in foods segment
Impact on financials: We have reduced FY19/20E earnings by 3%/2% respectively to account for the lower other income.
Valuations & view
Healthy India volume growth, effective cost control and recovery in the international business have been key positive highlights for Q4. India volume growth is expected to remain strong led by successful internal initiatives to drive growth/market shares coupled with likely uptick in rural markets due to tailwinds from normal monsoons and pre-election spends. Despite input cost inflation and increase in A&P spends, return of pricing growth as well as further improvement in International business profitability will drive a 15% EPS CAGR for the company over FY18-20E. Further, market share gains in Patanjali impacted categories provide further longer term comfort. Maintain Outperformer.
Dabur India is engaged in manufacturing, marketing and distributing consumer goods and its related products. Co.'s products include hair care, oral care, health supplements, digestives and candies, baby and skin care, fruit juices, cooking pastes and sauces. Co.'s brand names include Dabur, Asavs, Classicals, Dabur Shilajit, Naturecare, Shankhpushpi, Honitus and Ring Ring. Co. operates three business divisions: Consumer Care Division, Consumer Healthcare Division and the wholly owned subsidiary, Dabur Foods Limited.
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