Dabur - Volumes vroom; margin stages robust comeback - Edelweiss

Dabur's Q3FY13 numbers were in line with our estimates with domestic volume rising 9.5% YoY (on base of 8% versus 9% growth in Q2FY13 on base of 5%). Rural (up 20% YoY) and modern trade (up 30% YoY, unlike HUL) remain strong. Key positives were: (i) EBITDA margin expansion after six quarters; (ii) strong growth of ~30% YoY each in shampoos and home care; (iii) healthy growth in foods (22.1% YoY) led by 29% YoY surge in Real; and (iv) robust growth in skin care (15.7% YoY) led by Fem surging 20% YoY.

Key negatives were: (i) decline in digestives (down 5.4% YoY on high base and price hike in Hajmola to restore brand profitability); and (ii) continued slowdown in Namaste business (corrective steps taken and likely to revive in FY14E). We like Dabur's product innovation (launch of new juice variants, soft launch of coconut water, car & gel air fresheners) and aggression in ad spends.

Maintain 'BUY'.

Source : Equity Bulls

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