Q1FY20 result highlights
Key positives: Superlative domestic volume growth.
Impact on financials: Cut earnings by 2%/2% for FY20E/21E.
Valuations & view
Dabur reported an above consensus quarter led by strong domestic volume growth in an otherwise bleak macro environment led by its unique healthcare portfolio and industry leading execution. As Dabur is amongst the firsts to report in this quarter, it is not possible to make a relative comparison; but we believe that it is very difficult for any other staples company, in our coverage universe, to match this kind of growth. We remain medium-to-long term believers. However, as per Nielsen, the industry has decelerated sharply in the month of June with no signs of revival yet and Dabur also corroborated the same. As a result we marginally cut our sales CAGR est. to 11% (from 12% earlier) over FY19-21E. We value Dabur at 40x FY21E, a 18% discount to HUL’s target multiple and another quarter of volume growth outperformance will make us narrow this gap with the leader; any near-term weakness in the stock is a good buying opportunity, in our view. 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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