Dabur India - Q3FY21 First Cut - ICICI Direct

(CMP - Rs. 515, MCap - Rs. 93,302 crore)

Dabur India results were better than expected on both revenues & earnings front.

Q3FY21 Earnings Summary

- Dabur posted robust set of results with 16% revenue growth led by 18.1% volume growth in domestic business. Health Supplements, Oral Care, OTC, Ethical continued the growth momentum with 34.7%, 28%,34.1% & 23.2% sales growth respectively. Moreover, some of the matured categories like Hair Oil & Shampoos also witnessed a strong 11.5% & 27.1% growth during the quarter. On the other hand Beverages, Digestives & Home care categories are still struggling to get on to the growth path. International business grew by 13% with the constant currency growth of 14.1%

- The company maintained gross margins at 50.4% (31 bps higher) & employee spends sustained at the corresponding quarters level. However, the company increased its advertisement spends substantially (170 bps higher) to support the new products introduced in last ten months. The company was able to save 113 bps overhead spends by cost rationalisation efforts in a post pandemic period. Operating profit increased by 16.5% to Rs. 574.2 crore. The company was able to maintain its operating margins at 21%

- The company continued to aggressively launched new products in across categories. It introduced Himalayan Forest Honey, Dabur Red Pulling Oil, Herb1 toothpaste range & range of products in OTC & Ethical space. We believe new products are contributing much higher in FY21 compared to previous years. Dabur has been leveraging the health & immunity boosting trends through new product introductions

- Net profit grew by 23.7% to Rs. 493.5 crore mainly on account of higher operating profit, lower interest cost & lower tax provisioning

Dabur has seen consecutive quarters of strong growth in health & immunity boosting categories. The company has been able to capture the demand of immunity boosting products through newly launched in last ten months. Further, the company has increase the media spends to support these products. We believe some of the emerging brands would become growth drivers of future. Though small portion of its product portfolio (beverages & home care) have been adversely impacted due to restricted out of home activity, the high categories have more than compensated the loss. We believe the company would be able to uptick its margins territory with high operating leverage benefit incurring in future. We remain positive on the stock.

We will be coming out with a detailed update after the conference call with the management.

Shares of DABUR INDIA LTD. was last trading in BSE at Rs.515.25 as compared to the previous close of Rs. 527.6. The total number of shares traded during the day was 200429 in over 4134 trades.

The stock hit an intraday high of Rs. 532.25 and intraday low of 511.35. The net turnover during the day was Rs. 104767879.

Source : Equity Bulls

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