MOSL: DABUR (Downgrade to Neutral)-Decent performance-valuations fair
Dabur: Decent performance; valuations fair – downgrade to Neutral
(DABUR IN, Mkt Cap USD11.1b, CMP INR431, TP INR440, 2% Upside, Downgrade to Neutral)
- Dabur's 1QFY19 consolidated reported sales grew 16.2% YoY (19.6% on comparable basis) to INR20.8b (our estimate: INR21.5b). EBITDA grew 25% YoY to INR3.9b (our estimate: INR4.1b). Adjusted PAT grew 18.1% YoY to INR3.3b (our estimate: INR3.6b).
- Domestic FMCG business (67.8% of revenues) LTL sales grew 23.7% YoY, led by underlying volume growth of 21% YoY (highest ever for a quarter; our estimate: +15%). International sales grew 11.5% YoY (10.5% in CC terms).
- Consolidated EBITDA margin expanded 130bp YoY to 18.6% (our estimate: 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.
- Concall highlights: (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.
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.
Motilal Oswal Financial Services Ltd. is a reputed name in Financial Services and Online Trading with group companies providing services such as Private Wealth Management, Retail Broking and Distribution, Institutional Broking, Asset Management, Investment Banking, Private Equity, Commodity Broking, Currency Broking, Principal Strategies & Home Finance.
Motilal Oswal Securities is a group company of Motilal Oswal Financial Service Limited which started as a stock trading company and has blossomed into well diversified firm offering a range of financial products and services. Motilal Oswal has built a reputation as the source for best stock trading company and this has taken a wealth of experience, knowledge and expertise, constantly working in tandem, over the years.
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