Q3FY19 result highlights
Key positives: Strong domestic volume growth.
Key negatives: Weak International business performance
Impact on financials: No material change in earnings
Valuations & view
Dabur reported a healthy performance led by better than expected domestic volume growth partially offset by muted international business performance. With strong growth across all the core domestic segments, uptick in rural demand given government’s rural push prior to election coupled with its own internal initiatives, we expect double-digit growth in domestic FMCG business to continue. While challenges in international business are likely to remain for the near term, we believe, as macro & currency movement stabilises in key markets coupled with a low base, the international profitability can see a recovery in 2HFY20E. Given the volume outperformance and better earnings visibility (18% earnings CAGR over FY19-21E), we believe Dabur deserves premium to other mid-cap HPC peers. Maintain Outperformer rating on the stock.
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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