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Research
Dabur India - 4QFY13 Results Update - Motilal Oswal
Posted On : 2013-05-05 21:42:07( TIMEZONE : IST )
- 4QFY13 results in-line: Consolidated net sales grew 12.3% to INR15.3b (est. INR15.4b), EBITDA margin expanded 60bp to 17% (est. 16.7%) and PAT grew 18.4% to INR2.02b (est.INR1.94b). Domestic business volumes grew 12.3% (highest in 11 quarters), aided by tailwind benefits from the recent distribution expansion. The management maintained its guidance of 8-12% volume growth and expects growth to shift towards the higher end of the band.
- Standalone sales up 12%; EBITDA margin expands 220bp: Standalone sales grew 12% and gross margin expanded 150bp to 47.7%, led by a benign input cost environment. Flat ad spends and savings in other expenses enabled 220bp EBITDA margin expansion to 18.5%. The management guided 150-200bp gross margin expansion in FY14.
- Domestic business up 15.1%: Domestic business reported sales growth of 15.1%,driven by strong performance in Foods (22.6%), Home Care (33%), Shampoos (29%) and Health Supplements (22.6%).
- International business growth muted: Sales grew muted 11.6%, led by organic growth of 19.7% (constant currency growth at 12.9%), 20% growth in GCC, 15% in Egypt, 30% in Levant and 57% in Bangladesh. Among the acquired businesses, Hobi grew 42%, but Namaste posted another weak quarter and ended the year with 10% revenue decline. The management indicated a turnaround in the business in FY14, with a likely growth of 15-20%.
- Estimates unchanged; maintain Buy: We expect the tailwind benefits from reach expansion to continue in FY14. Expecting a narrowing of the valuation gap vis-Ã -vis peers, we had upgraded DABUR to Buy post 3Q results. [We had said in our 3QFY13 results update, "The valuation discount to other mid-cap peers was owing to muted performance in its core categories. We expect the valuation gap to narrow, as (a) volume growth sustains in the 8-10% band, driven by recovery in core categories, and (b) margins improve, led by the International business division".] We maintain our estimates and Buy rating, with a revised target price of INR165 (25x FY15E EPS).
