CMP 270.20

Target Price 310.00

ISIN: INE016A01026

OCTOBER 31st

2015

DABUR INDIA LIMITED

Result Update (CONSOLIDATED): Q2 FY16

BUYBUYBUYBUY

Index Details

Stock Data

Sector FMCG

BSE Code 500096

Face Value 1.00

52wk. High / Low (Rs.) 316.50/215.50

Volume (2wk. Avg. Q.) 82000

Market Cap (Rs. in mn.) 475308.82

Annual Estimated Results (A*: Actual / E*: Estimated)

YEARS FY15A FY16E FY17E

Net Sales 78272.00 85692.19 92890.33

EBITDA 14744.60 17348.61 19157.43

Net Profit 10658.30 12635.47 14066.36

EPS 6.07 7.18 8.00

P/E 44.53 37.62 33.79

Shareholding Pattern (%)

(QUARTERLY) As on Sep-15 As on Jun-15

PROMOTER 68.08 68.16

FIIs 20.96 21.13

DIIs 4.42 4.62

OTHERS 6.54 6.09

1 Year Comparative Graph

DABUR INDIA LIMITED BSE SENSEX

SYNOPSIS

� Dabur India Limited is one of India’s leading FMCG,

operates in key consumer products categories like

Hair Care, Oral Care, Health Care, Skin Care, home Care

& Foods.

� The Company’s consolidated Net Profit jumps to Rs.

3411.30 million for the 2nd quarter of FY16 with a

18.66% y-o-y increase from Rs. 2874.80 million in

same quarter of previous year.

� Net sales of the company ramps up by 8.64% to Rs.

20962.30 million for the 2nd quarter of the financial

year 2016 as against Rs. 19295.80 million in the

corresponding quarter of the previous year.

� In Q2 FY16, Dabur ended with a 17.83% growth in

EBITDA to Rs. 4591.80 million against Rs. 3897.00

million in Q2 FY15.

� Profit before tax (PBT) at Rs. 4139.50 million in Q2

FY16 compared to Rs. 3503.10 million in Q2 FY15

registered a growth of 18.17% YOY.

� The company has recommended an interim dividend

@125% i.e., Rs. 1.25/- per share on face value of Rs.

1.00/-each for the financial year 2016.

� Daburs Hair Oils business revived this quarter posting

growth of 14% with Oral Care business Dabur Red

Paste and Meswak, continued to move forward on its

strong growth trajectory and ended the quarter with a

near 19% growth.

� During the quarter, Dabur extended the Hajmola

brand to the beverage market with the launch of

Hajmola Yoodley

� Net Sales and PAT of the company are expected to

grow at a CAGR of 11% and 16% over 2014 to 2017E

respectively.

PEER GROUPS CMP MARKET CAP EPS P/E (X) P/BV(X) DIVIDEND

Company Name (Rs.) Rs. in mn. (Rs.) Ratio Ratio (%)

Dabur India Ltd. 270.20 475308.82 6.07 44.53 14.15 200.00

Bajaj Corp Ltd. 420.05 61957.40 14.51 28.95 12.60 1150.00

Godrej Consumer Products Ltd. 1294.50 440819.90 20.14 64.28 13.03 550.00

Hindustan Unilever Ltd. 801.55` 1734450.70 19.83 40.42 46.57 1500.00

Analysis & Recommendation - ‘BUY’

For the September quarter of financial year 2016, Dabur India Ltd reported a 9.27% growth in consolidated total

income of Rs. 21509.20 million compared to Rs 19684.40 million in the same quarter last year. The Group has

posted a profit after taxes, minority interest and share of profit / loss of associates of Rs. 3411.30 million for the

quarter ended September 30th, 2015 as compared to Rs. 2874.80 million for the quarter ended September 30th,

2014. In Q2 FY16, Dabur ended with a 17.83% growth in EBITDA to Rs. 4591.80 million against Rs. 3897.00

million in Q2 FY15. Dabur India Ltd report strong financial result for 2nd quarter of FY16 with robust growth

across key categories like Toothpastes, Hair Oils and Home Care. Dabur’s International Business recorded

good growth during the second quarter.

Dabur India focus is on its cost efficiencies and pursues an aggressive and profitable growth strategy. The

company continues to strengthen its business for the long term by driving innovation and investing behind its

brands. With these initiatives, the company is confident of growing ahead of the market and improving its market

share. Daburs Hair Oils business revived this quarter posting growth of 14% with Oral Care business Dabur Red

Paste and Meswak, continued to move forward on its strong growth trajectory and ended the quarter with a near

19% growth. The Home Care business ended the quarter with an over 12% growth, while the OTC & Ethicals

business ended the period with a near 11% growth. We expect that the company surplus scenario is likely to

continue for the next three years, will keep its growth story in up coming quarters and also expect the company

to post a CAGR of 11% and 16% in its top-line and bottom-line respectively. Hence, we recommend ‘BUY’ for

‘DABUR INDIA LIMITED’ with a target price of Rs. 310.00 on the stock.

QUARTERLY HIGHLIGHTS (CONSOLIDATED)

Results updates- Q2 FY16,

Dabur India Limited is one of India’s leading FMCG

Companies. Building on a legacy of quality and

experience of over 130 years, operates in key

consumer products categories like Hair Care, Oral

Care, Health Care, Skin Care, home Care & Foods, has

reported its financial results for the quarter ended

30th September, 2015.

The company has achieved a turnover of Rs. 20962.30 million for the 2nd quarter of the financial year 2016 as

against Rs. 19295.80 million in the corresponding quarter of the previous year. EBITDA stood at Rs. 4591.80

million a growth of 17.83% compare to corresponding quarter of the previous year. In Q2 FY16, net profit of Rs.

3411.30 million as against Rs. 2874.80 million in Q2 FY15. The company has reported an EPS of Rs. 1.94 for the

2nd quarter as against an EPS of Rs. 1.64 in the corresponding quarter of the previous year.

Months Sep-15 Sep-14 % Change

Net Sales 20962.30 19295.80 8.64

Net Profit 3411.30 2874.80 18.66

EPS 1.94 1.64 18.48

EBITDA 4591.80 3897.00 17.83

Break up of Expenditure:

During the quarter, total expenditure rose up by 7 per cent, mainly on account of Advertisement & Publicity by

10%, Employee Benefit Expenses by 10%, and Purchase of Stock in trade by 62%, along with Other Expenditure

by 13% are the primary attribute for the growth of expenditure when compared with corresponding quarter of

previous year. Total expenditure in Q2 FY16 stood to Rs. 17246.10 million as against Rs. 16079.40 million in Q2

FY15.

Segment Revenue

Particulars Rs. Millions

Q2 FY16 Q2 FY15

Cost of Material Consumed 7530.70 7946.40

Purchase of Stock in Trade 2528.50 1558.30

Advertising & Publicity 2784.20 2533.50

Employee Benefit Expenses 2008.00 1825.10

Depreciation & Amortization

Expense 328.70 292.00

Other Expenditure 2706.80 2394.90

Latest Updates

• The company has recommended an interim dividend @125% i.e., Rs. 1.25/- per share on face value of Rs.

1.00/-each for the financial year 2016.

• During the quarter, Dabur extended the Hajmola brand to the beverage market with the launch of Hajmola

Yoodley and also strengthened its presence in the professional skin care market with the launch of two new

products under the OxyLife brand. In addition, the hair oil portfolio was expanded with the launch of Vatika

Jasmine.

• Dabur India Ltd has reported that Dabur Pakistan (Pvt.) Ltd, incorporated in Pakistan has become the

Company's step down subsidiary Company, upon issuance of shares by the said Company to the existing

wholly owned subsidiary - Dabur International Limited.

• The Home Care business ended the quarter with an over 12% growth, while the OTC & Ethicals business

ended the period with a near 11% growth.

• During the quarter Rs. 2726.60 million and Rs. 73.10 million has invested and encashed respectively on

account of long term investment.

Standalone results for the Quarter ended September 30, 2015:

• The Company has posted a net profit of Rs. 2276.60 million for the quarter ended September 30, 2015 as

compared to Rs. 1886.50 million for the quarter ended September 30, 2014.

• Total Income has increased from Rs. 13263.60 million for the quarter ended September 30, 2014 to Rs.

14464.70 million for the quarter ended September 30, 2015.

COMPANY PROFILE

Dabur India Limited is one of India’s leading FMCG Companies. Dr. Burman is founder of Dabur in 1884 to

produce and dispense Ayurvedic medicines. Building on a legacy of quality and experience for 130 years, Dabur

is today India’s most trusted name and the world’s largest Ayurvedic and Natural Health Care Company. Dabur

India's FMCG portfolio today includes five flagship brands with distinct brand identities - Dabur as the master

brand for natural healthcare products, Vatika for premium personal care, Hajmola for digestives, Réal for fruit-

based beverages, and Fem for fairness bleaches & skin care.

Dabur India Ltd's manufacturing activities spanning various consumer products categories are carried out in 17

factories spread across India and abroad. Dabur has 11 manufacturing facilities in India, out of which two main

units are at Baddi (Himachal Pradesh) and Pantnagar (Uttaranchal).

Products

• Health Care:

� Dabur Chyawanprash (Health supplement)

� Hajmola, Dabur pudin Hara (digestives)

� Dabur Honitus, Dabur stresscom (OTC &

Ethicals)

• Personal Care:

� Dabur Amla hair oil (hair care)

� Dabur Red, Babool (oral Care)

� Dabur Gulabri, Fem Saffron (skin care)

• Foods

� Real,

� Active, Burrst (fruit juices)

� Lemoneez

� Dabur Hommade

� Capsico (Red chilli sauce)

• Home Care

� Odonil

� Odomos

� Sani fresh

• Consumer Health – Ethical

� dabur Rheumatill,

� dabur broncorld,

� dabur Lipistat

• Professional Range

• Guar Gum

FINANCIAL HIGHLIGHT (CONSOLIDATED) (A*- Actual, E* -Estimations & Rs. In Millions)

Balance Sheet as at March 31, 2014 -2017E FY-14A FY-15A FY-16E FY-17E

I EQUITY AND LIABILITIES

1) Shareholder's Funds

a) Capital 1743.80 1756.50 1756.80 1756.80

b) Reserves and Surplus 24815.80 31784.90 39635.77 48355.64

Sub -Total- Shareholder fund 26559.60 33541.40 41392.57 50112.44

2) Minority Interest 159.10 181.60 205.93 226.53

3) Non Current Liabilities

a) Long- Term Borrowings 2604.00 2105.70 1789.85 1539.27

b) Differed Tax Liability 448.30 587.10 742.09 823.72

d) Long Term Provisions 408.90 462.10 522.17 574.39

Sub-Total Non Current Liabilities 3461.20 3154.90 3054.11 2937.38

4) Current Liabilities

a) Short Term Borrowings 4477.40 5229.90 5909.79 6382.57

b) Trade Payables 10965.30 10958.40 12821.33 13590.61

c) Other Current Liabilities 4794.20 5436.40 4838.40 4354.56

d)Short Term Provisions 2701.00 2560.20 4621.16 4870.70

Sub-Total - Current Liabilities 22937.90 24184.90 28190.67 29198.44

TOTAL EQUITY AND LIABILITIES (1+2+3+4) 53117.80 61062.80 72843.29 82474.79

II ASSETS

5) Non- Current Assets

Fixed Assets

i. Tangible Assets 11329.90 12343.60 13331.09 14264.26

ii. Intangible Assets 6339.10 6427.70 6594.82 6726.72

iii. Capital work in progress 217.10 503.00 729.35 962.74

a) Total Fixed Assets 17886.10 19274.30 20655.26 21953.72

b) Other non-current assets 180.70 201.30 221.43 240.03

c) Non Current Investments 4246.90 14074.00 19056.20 23629.68

d) Long Term Loans & Advances 245.40 207.50 232.40 213.81

Sub -Total- Non- Current Assets 22559.10 33757.10 40165.29 46037.25

6) Current Assets

a) Current Investment 6517.80 4059.70 4790.45 5269.49

b) Inventories 9722.90 9732.70 10511.32 11005.35

c) Trade Receivables 6753.00 7108.40 8316.83 9148.51

d) Cash & Cash Equivalents 5193.80 2760.40 3549.87 4366.35

e) Short- Term Loans and Advances 1320.10 2788.70 4015.73 4979.50

f) Other Current Assets 1051.10 855.80 1493.81 1668.34

Sub -Total Current Assets 30558.70 27305.70 32678.00 36437.54

TOTAL ASSETS (5+6) 53117.80 61062.80 72843.29 82474.79

Annual Profit & Loss Statement for the period of 2014 to 2017E

Value(Rs. mn) FY-14A FY-15A FY-16E FY-17E

Description 12m 12m 12m 12m

Net Sales 70944.30 78272.00 85692.19 92890.33

Other Income 1314.60 1580.50 2181.09 2530.06

Total Income 72258.90 79852.50 87873.28 95420.39

Expenditure -59380.00 -65107.90 -70524.67 -76262.96

Operating Profit 12878.90 14744.60 17348.61 19157.43

Interest -541.50 -401.20 -473.42 -520.76

Gross profit 12337.40 14343.40 16875.19 18636.68

Depreciation -974.90 -1149.80 -1316.52 -1421.84

Profit Before Tax 11362.50 13193.60 15558.67 17214.83

Tax -2190.80 -2508.90 -2909.47 -3133.10

Profit After Tax 9171.70 10684.70 12649.20 14081.73

Extraordinary Items -7.20 0.00 0.00 0.00

Minority Interest -25.30 -26.40 -13.73 -15.38

Net Profit 9139.20 10658.30 12635.47 14066.36

Equity capital 1743.80 1756.50 1759.10 1759.10

Reserves 24815.80 31784.90 39635.77 48355.64

Face value 1.00 1.00 1.00 1.00

EPS 5.24 6.07 7.18 8.00

Quarterly Profit & Loss Statement for the period of 31st Mar, 2015 to 31st Dec, 2015E

Value(Rs. mn) 31-Mar-15 30-Jun-15 30-Sep-15 31-Dec-15E

Description 3m 3m 3m 3m

Net Sales 19497.40 20694.90 20962.30 22261.96

Other income 446.90 478.60 546.90 560.03

Total Income 19944.30 21173.50 21509.20 22821.99

Expenditure -16040.90 -17477.40 -16917.40 -18237.00

Operating profit 3903.40 3696.10 4591.80 4584.99

Interest -102.90 -117.00 -123.60 -125.58

Gross profit 3800.50 3579.10 4468.20 4459.41

Depreciation -281.90 -326.40 -328.70 -343.82

Profit Before Tax 3518.60 3252.70 4139.50 4115.59

Tax -670.00 -631.70 -727.80 -769.62

Profit After Tax 2848.60 2621.00 3411.70 3345.98

Minority Interest -1.00 -9.90 -0.40 -0.60

Net Profit 2847.60 2611.10 3411.30 3345.38

Equity capital 1756.50 1756.80 1759.10 1759.10

Face value 1.00 1.00 1.00 1.00

EPS 1.62 1.49 1.94 1.90

Ratio Analysis

Particulars FY-14A FY-15A FY-16E FY-17E

EPS (Rs.) 5.24 6.07 7.18 8.00

EBITDA Margin (%) 18.15 18.84 20.25 20.62

PBT Margin (%) 16.02 16.86 18.16 18.53

PAT Margin (%) 12.93 13.65 14.76 15.16

P/E Ratio (x) 51.56 44.53 37.62 33.79

ROE (%) 34.53 31.86 30.56 28.10

ROCE (%) 41.18 38.88 38.02 35.46

Debt Equity Ratio 0.27 0.22 0.19 0.16

EV/EBITDA (x) 36.23 32.22 27.36 24.72

Book Value (Rs.) 15.23 19.10 23.53 28.49

P/BV 17.74 14.15 11.48 9.48

Charts

OUTLOOK AND CONCLUSION

� At the current market price of Rs. 270.20, the stock P/E ratio is at 37.62 x FY16E and 33.79 x FY17E

respectively.

� Earning per share (EPS) of the company for the earnings for FY16E and FY17E is seen at Rs.7.18 and Rs.8.00

respectively.

� Net Sales and PAT of the company are expected to grow at a CAGR of 11% and 16% over 2014 to 2017E

respectively.

� On the basis of EV/EBITDA, the stock trades at 27.36 x for FY16E and 24.72 x for FY17E.

� Price to Book Value of the stock is expected to be at 11.48 x and 9.48 x respectively for FY16E and FY17E.

� We recommend ‘BUY’ in this particular scrip with a target price of Rs.310.00 for Medium to Long term

investment.

INDUSTRY OVERVIEW

Despite a marked buoyancy in consumer confidence as reported by Nielsen, it did not translate into increased

consumption across sectors, including the Fast Moving Consumer Goods (FMCG) industry. The sector reported

muted growth for most part of the year with some key segments even reporting degrowth, blamed largely on the

sense of uncertainty prevailing among consumers during the past few years.

If fiscal 2013-14 was considered a tough year for Indian consumer sector, it only worsened in 2014-15. Though

the emerging trends did indicate that the growth deceleration has bottomed out, it was still too early to detect

any signs of a recovery. According to The Nielsen Company, FMCG sector growth rates slipped further to low

single digits around the middle of fiscal 2014-15. With growth rates beginning to inch up marginally towards the

end of the fiscal, the sector is expected to stage a recovery in the coming quarters.

A revival in consumer demand is expected to happen in the near to medium term and is likely to be driven by a

combination of the below mentioned factors:

(a) Disposable household income revival due to sustained low inflation, and gradual rise in job creation over the

next 12-24 months

(b) Revival in discretionary consumer demand due to translation of positive sentiment around economic growth

into retail consumer spends

(c) Growing demand for e-commerce for purchase of goods and services due to convenience factor and

increasing number of internet users

(d) Growth of Modern Trade and enhanced brand visibility and availability

(e) Increasing demand for premium products in urban markets

(f) Increasing penetration and rising consumption among rural consumers

(g) Evolving consumer lifestyle and greater awareness of brands leading to conversion from unorganized to

organized

Recent initiatives such as proposed implementation of GST should work for the benefit of organized sector by

developing a common Indian market and reducing the cascading effect on the cost of goods and services. In

addition the Swachh Bharat campaign is likely to lead to greater demand for health and hygiene related products.

Continuity of MNREGA, newer schemes to boost rural farm yields, investment in infrastructure, and creation of

National Agricultural mission to ensure better prices for both farmers and consumers, all these initiatives are

expected to help the rural growth story improve. This coupled with direct transfer of subsidy into beneficiaries’

bank accounts, will have a favorable impact on disposable incomes and boost FMCG growth in rural areas.

The long-term government agenda of investing in infrastructure as well as building smart cities should be

favourable for FMCG sector. Overall the FMCG sector is expected to gain momentum with increasing economic

activity, rise in income levels, favorable demographics, increase in working population and lower inflation cycle.

While the long term prospects remain intact, the FMCG industry is also changing fast with technological

advancement, changes in consumption patterns, emergence of newer channels such as e-commerce and

increasing salience of organized retail. E-commerce for instance is growing very fast and offers immense

opportunities. The emergence of local intra-city online vendors who operate within a few kilometers distance

and have low cost operating models is posing new challenges to retailers as well as manufacturers. In addition

digital / web based marketing and communication is becoming an important channel to connect with younger

consumers. In fact the emergence of the new age consumers who are extremely demanding, discerning and not

shy of spending is throwing up a whole lot of challenges as well as opportunities which need to be recognized

and factored into plans and strategies to be future ready.

Disclaimer:

This document is prepared by our research analysts and it does not constitute an offer or solicitation for the

purchase or sale of any financial instrument or as an official confirmation of any transaction. The information

contained herein is from publicly available data or other sources believed to be reliable but we do not represent that

it is accurate or complete and it should not be relied on as such. Firstcall Research or any of its affiliates shall not be

in any way responsible for any loss or damage that may arise to any person from any inadvertent error in the

information contained in this report. Firstcall Research and/ or its affiliates and/or employees will not be liable for

the recipients’ investment decision based on this document.

Firstcall India Equity Research: Email – info@firstobjectindia.com

C.V.S.L.Kameswari Pharma & Diversified

U. Janaki Rao Capital Goods

B. Anil Kumar Auto, IT & FMCG

M. Vinayak Rao Diversified

G. Amarender Diversified

Firstcall Research Provides

Industry Research on all the Sectors and Equity Research on Major Companies

forming part of Listed and Unlisted Segments

For Further Details Contact:

Tel.: 022-2527 2510/2527 6077 / 25276089 Telefax: 022-25276089

040-20000235 /20000233

E-mail: info@firstobjectindia.com

www.firstcallresearch.com