Dabur India – Decent September Quarter Numbers

Dabur India reported a decent set of September quarter numbers of 2012. On a consolidated basis, Net Sales of the company grew by 20.62 per cent (volume growth of around 10.5 per cent) to Rs 1522.6 crore while Net Profit grew by 16.39 per cent to Rs 202.4. Even on a half yearly basis, the company's top-line grew by 21 per cent to 2985 Rs crore while the bottom line grew by 12 per cent to Rs 352 crore.

From the above table we can see that the company has witnessed a lower raw material expense which is evident from the fact that Raw Material to sales ratio has decreased by 111 basis points or 49.26 per cent on YoY basis which is good for the company. However due to higher Advertisement expenses, it posted lower EBITDA margins for the quarter. Advertisement to sales ratio increased by 174 basis points to 11.84 per cent resulting in EBITDA margins contracting by 133 basis points to 19.11 per cent on YoY basis. One should note that higher advertisement would create brand awareness for the company which is good for growth in the long run.

Of the total sales, around 67 per cent comes from the domestic business while the remaining 33 per cent comes from the International business. Domestic business grew by 15.3 per cent while International business saw a robust growth of 24.8 per cent on YoY basis. Consumer Care business being its major segment (contributed around 83 per cent of total sales) grew by 18.5 per cent to Rs 1263.76 crore while profit from the same also grew by 20.67 per cent to Rs 290 crores on YoY basis.

The company declared an interim dividend of Rs 0.65 per share (65 per cent at the Face Value of Rs 1). Overall we believe the company posted a decent performance and going ahead would continue with its good performance. On the valuation front, the stock is currently trading at 12 months Trailing Price to Earnings multiple of 31.5 times which could be considered as fairly valued. We believe, with volatile market condition, one may see some southward movement in the share price. Hence one could enter the counter at a lower level. We believe if one invests keeping in mind a longer term view, one could get handsome returns.