Dabur India is the fourth largest fast moving consumer goods (FMCG) company in India, with presence in health care, personal care and food products in various categories such as hair oils, shampoos, toothpaste, health supplements (glucose, chyawanprash), baby and skin care, insect repellants, fruit juices, and ayurvedic tonics. It has powerful brands like Dabur Amla, Dabur Chyawanprash, Dabur Honey, Vatika, Hajmola and Real. Manufacturing locations are across India and abroad. The company also has an international business division.
Consolidated net sales grew 16% to Rs 2361.07 crore in the year ended March 2008 (FY 2008) compared with Rs 2043.14 crore in FY 2007. In the haircare category, hair oils sales rose 13%, led by Dabur Amla, which grew 18% in FY 2008. The shampoo category, too, continued its strong performance, with sales increasing 25%. Dabur has now expanded its haircare offering with the introduction of a new Vatika Black Shine shampoo variant besides entering the conditioner market with two variants under the Vatika brand.
Dabur’s toothpaste sales, led by Babool, Dabur Red and Meswak, spurted 27% in FY 2008 and FY 2007 — much ahead of the industry growth of 14%. The company has also expanded its oralcare portfolio with the introduction of the Babool Neem variant in the fiscal.
Revenue of the health supplement business moved up, while the foods business grew 19% in FY 2008. Dabur India has revamped and relaunched 60% of the consumercare division product portfolio, laying the foundation for a stronger future growth. The consumerhealth division also marked a turnaround, with sales spurting 12% in the second half of FY 2008 and 5% in the entire financial year.
Overseas sales also recorded significant gains, surging 26% in FY 2008, with strong performances across most focus markets. Sales in the Gulf Co-operation Council (GCC) region increased 33%, led by new product launches, while Dabur Egypt’s sales soared a robust 49%.
Operating profit margin (OPM) increased 20 basis points (bps) to 17.3%. Strong growth in key categories coupled with stringent cost-saving initiatives helped Dabur India to mitigate the impact of escalating costs. Operating profit grew 17% to Rs 409.33 crore, profit before tax 20% to Rs 384.44 crore, and net profit after minority interest 18% to Rs 332.94 crore.
Dabur India is seeing high growth in the fruit-drink segment in addition to the fruit-juice segment as consumers are shifting from aerated waters to fruit drinks. The company plans to emphasise fruit drinks, going forward, after giving its current product Twist a new identity. The integration of foods into the consumercare division will help in the next big emphasis on fruit drinks.
Besides rolling out the Gulabari skin-care range across India and launching ayurvedskin care, Dabur India will unveil juice variants at different price points, and re-launch Meswak.
The other key development in FY 2008 will be Dabur India’s foray into retail through its subsidiary company H&B Stores. The subsidiary plans to grow rapidly and mark its presence across India by opening around 30 new stores by end FY 2009. Initially, the business will be in an investment phase, but will start generating returns as it attains a certain size and increases its footprint. Investments in retail resulted in a minor negative impact on consolidated net profit in FY 2008, and will continue to have such an impact over the next couple of years.
We expect Dabur India to register consolidated sales and net profit after minority interest of Rs 2720.29 crore and Rs 380.48 crore, respectively, in FY 2009. On an equity of Rs 86.50 crore and face value of Re 1 per share, EPS works out to Rs 4.5. The share price trades at Rs 72. P/E is 16.
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