MOSL: DABUR (Buy)-Strong domestic performance; Rural to contribute incrementally
DABUR: Strong domestic performance; Rural to contribute incrementally
(DABUR IN, Mkt Cap USD8.7b, CMP INR354, TP INR415, 17% Upside, Buy)
- Dabur’s 3QFY18 consol. sales grew 6.1% YoY to INR19.7b (est. of INR20.7b). EBITDA rose 20.8% YoY to INR4.0b (est. of INR4.1b). Adj. PAT increased 13% YoY to INR3.3b (est. of INR3.6b).
- Comparable domestic FMCG business (70% of revenues) sales grew 17.7% YoY, led by underlying volume growth of 13% YoY (est. of +15%).
- Segmental performance: Oral care, hair oil and health supplements reported growth of 23%, 16.7% and 19.5%, respectively. On the other hand, foods reported flat numbers on a very high base. International sales grew 5% on a constant currency (CC) basis.
- EBITDA margin expanded 250bp YoY to 20.5% (est. of 19.8%), led by gross margin expansion of 220bp YoY to 51.6%. Lower other expenses (-40bp YoY) and ad spends (-10bp YoY) were partially offset by higher staff costs (+20bp YoY). Lower-than-estimated other income led to a miss in adj. PAT.
- Reported standalone sales, EBITDA and adj. PAT grew 12.9%, 27.5% and 15.9%, respectively. EBITDA margin expanded 240bp YoY to 21.4%.
- Concall highlights: 1) Rural growth was strong at 24% YoY in 3QFY18, mainly led by initiatives like Project Buniyaad. 2) Expect commodity price inflation from 4QFY18; company is likely to take price hike only 1QFY19 onward in the event of further inflation in raw material costs.
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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