Q1FY21 - Result Update

31st July 2020 Dabur India Ltd

Below Estimates due to Slowdown in economic activity and Supply Chain
disruptions

CMP: Rs 492 Dabur India earnings were below our estimates on all fronts as Covid-19
pandemic disrupted the business performance of the company. Profit for
Rating: HOLD the quarter de-grew by 6.1%YoY/+21.0% QoQ to Rs 341 Cr during
Q1FY21. Consolidated revenue stood at Rs 1,980 cr ,below our estimates
Target Price: Rs 515 Rs 2,209 registering a degrowth 12.9%YoY/+6.1%QoQ. Reported EBITDA
de-grew by 9.0%YoY/+18.2%QoQ to Rs 416 Cr, below our estimate of Rs
Stock Info 446 Cr, while EBITDA margin expanded by 90bps YoY/215bps QoQ.
BSE 500096
NSE DABUR Q1FY21 Segment Highlights
Bloomberg DABUR IN
• Dabur Chyawanprash reported a growth of over 694% during the
Reuters DABUR.NS quarter, while Dabur Honitus grew by over 80% while Dabur Honey
Sector Personal care ended Q12020-21 with a growth of over 60%.
Face Value (Rs) 1 • The quarter saw Dabur introduce a record number of new products
and variants anchored on the consumer need for Health, Immunity
Equity Capital (Rs Cr) 177
and Hygiene. The quarter saw new products record Sales of over Rs
Mkt Cap (Rs cr) 86,939 100 Crore.
52w H/L (Rs) 525/ 386 • The OTC Healthcare Business ended the quarter with a 34% growth
Avg Yearly Vol (in 000’) 2597 while the Ayurvedic Ethicals business was up 11%.
• The Toothpaste Business, on the back of continued demand for Dabur
Shareholding Pattern % Red Paste, ended the quarter with a nearly 3% growth.
(As on June, 2020) • International Business reported a decline of 21.6%. Egypt recorded a
decline of 26.1%.
Promoters 67.87
• Namaste’s US business reported strong 12.3% growth.
Public & Others 32.13 • MENA was impacted by Covid and macroeconomic headwinds.
• While Nepal business saw a decline of 53% on account of curfews in
the country, Bangladesh saw a growth of 14%.
Stock Performance (%) 3m 6m 12m
Dabur 4.9 -1.0 16.3 Valuations
Nifty 19.4 -5.17 0.15 At CMP of Rs 492, Dabur India currently trades at a FY20 P/E of 60x. We
have lowered our revenue estimates owing to lower than expected sales
and profitability in Q1FY21. Dabur has adopted an aggressive approach
Dabur Vs Nifty with launch of a slew of immunity boosters, Juices and Milkshake and
Covid care products (Hand, Surface sanitizer, COVID kit and Veggies wash
130 etc.) which will help to gain market share in certain extent.
110
90
70 We value Dabur at PE of 54x to its FY22E EPS of Rs 9.5, which yields a
50 Target Price of Rs 515. We maintain our recommendation to Hold on the
Nov-19
Dec-19

Jun-20
Jul-19

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Sep-19

Feb-20

Apr-20
Aug-19

May-20
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Mar-20

stock.

Dabur India Nifty 50 Financial Performance

YE March EBITDA
Net Sales EBITDA PAT EPS (Rs) RoE (%) P/E (x)
(Rs Cr) Margin %
FY19 8,533 1,740 1,446 8.2 20.4% 25.7% 60.1
FY20 8,704 1,792 1,448 8.2 20.6% 21.9% 60.0
FY21E 8,803 1,777 1,494 8.5 20.2% 18.9% 58.2
FY22E 9,270 2,016 1,679 9.5 21.7% 18.3% 51.8

Source: Arihant Research, Company Filings, Ace Equity, Bloomberg

Arihant Capital Markets Ltd Arihant Capital Markets Limited|Research Analyst SEBI Registration No: INH000002764
1011, Solitaire Corporate Park, Bldg No.10, 1st Floor, Andheri Ghatkopar Link Rd, Chakala, Andheri (E), Mumbai 400093
Q1FY21 - Result Update| Dabur India Ltd.

Q1FY20 Financial Performance

Rs Cr (consolidated) Q1FY21 Q4FY20 Q1FY20 Q-o-Q Y-o-Y

Net Revenue 1,980 1,865 2,273 6.1% -12.9%
Material Cost 1,002 950 1,148 5.5% -12.7%
Employee cost 224 230 231 -2.7% -3.3%
Other Expenses 338 333 437 1.4% -22.6%
EBITDA 416 352 458 18.2% -9.0%
EBITDA margin % 21.0% 18.9% 20.1% 215bps 90bps
Other Income 72 76 73 -5.3% -2.0%
Depreciation 57 59 53 -3.6% 7.6%
EBIT 432 369 478 16.9% -9.8%
Finance cost 8 9 15 -8.5% -48.7%
Exceptional Item - -20 -20 - -
PBT 424 341 443 24.4% -4.3%
Tax Expense 83 59 79 40.7% 3.9%
Effective tax rate % 19.5% 17.2% 17.9% 226bps 154bps
PAT 341 282 363 21.0% -6.1%
MI & Associates -0 -1 -0
Consolidated PAT 341 281 363 21.2% -6.2%
PAT margin % 17.2% 15.1% 16.0% 214bps 124bps
EPS (Rs) 1.9 1.6 2.1 21.4% -6.1%
Source: Arihant Research, Company Filings, Ace Equity, Bloomberg

Conference Call Highlights

Management stated that despite a challenging April, the quarter saw a nearly 7-fold growth in demand for Dabur Chyawanprash
and an over 60% surge in demand for Dabur Honey.Dabur has significantly ramped up capacity with production now at near-
normal levels and the business poised to deliver growth for the rest of the year.
Healthcare portfolio: Going forward, Company will also capitalize on the emerging tailwinds and distribution might to further
strengthen position as a frontrunner in the Ayurvedic Healthcare and Hygiene products markets.
OTC business reported 34.4% on back of robust performance of Honitus, tulsi drop, Haldi drops, Ashwagandha tablets. Ethicals
business was also performed very well reporting a 10.7% growth on back of strong demand for immunity boosting products, such
as Dabur Ayush kwath, Giloy, ashwagandha, and would be an expansion of old range.
Recently launched product with a dabur sanitize, and the cleaning and disinfecting range on the dabur sanitize and dazzle brands
posted strong performance. In fact, the newly launched dabur sanitized brand as registered a growth of 90 crores during the
quarter.
HPC (Home and Personal Care): Toothpaste market share grew ~60bps, and the gain in market share was across the brands. Hair
Oil category witnessed significant decline of -25.6% in Q1 FY21. In pure coco oils, market shares saw an increase of 20 bps and in
perfumed oils, the market shares saw an increase of 40 bps. Market share in shampoo category increased by ~120 bps.
Foods: Food witness a decline of 14.4% in Q1FY21 is mainly on account of a sharp slowdown in J&N category showed a volume
decline of 51.4%. However, real has increased market share by (`260bps). However, Company has entered Drinks category,
launched Real Mango Drink in PET format and Real Apple Mini in INR 10 pack. Launched 4 variants of milkshakes under Real.

Three Structural change:

1. Pre season loading; by reducing the pipelines because it will reduce the pipeline we embarked on the country based sales
monitoring system.
2. The Company is monitoring the secondary and maintaining a normal data entry and secondary translating into primary and
this is a CRS that the company is implementing on system basically continuous replenishment model.
3. Company has upgraded drishti App.

Outlook: The Company is looking at cost optimization initiatives across the business which will help Dabur to manage
profitability. Going forward, Management intends to drive business by staying focused on health and hygiene, driving innovation
broadening playing market, focusing on e-commerce and modern besides spending and enhancing efficiency in the distribution
network. These initiatives will be further, coupled with cost and cash flow management to ensure healthy margins.

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 Q1FY21 - Result Update| Dabur India Ltd.

Income Statement (Rs Cr) Balance Sheet (Rs Cr)

Year End-March FY19 FY20 FY21E FY22E Year End-March FY19 FY20 FY21E FY22E

Revenues 8,533 8,704 8,803 9,270 Sources of Funds

Share Capital 177 177 177 177
Change (%) 10.5% 2.0% 1.1% 5.3% Reserves & Surplus 5,455 6,429 7,737 8,998
Raw materials 4,309 4,360 4,477 4,699 Net Worth 5,632 6,606 7,914 9,174
Gross Profit 4,224 4,343 4,326 4,571 Loan Funds 524 467 791 917
MI, Deferred Tax & other
Employee costs 938 948 975 953 liabilities 59 59 58 58
Other expenses 1,547 1,603 1,574 1,602 Capital Employed 6,215 7,131 8,763 10,149
Total Expenses 6,793 6,911 7,026 7,254 Application of Funds
Gross Block 2,828 3,332 3,731 4,130
EBITDA 1,740 1,792 1,777 2,016
Less: Depreciation 1,195 1,415 1,637 1,875
Other Income 296 305 300 300 Net Block 1,600 1,917 2,094 2,255
Depreciation 177 220 222 238 CWIP 64 147 147 147
Interest 60 50 73 73 Other non current assets 502 954 954 954
Current tax assets 2 2 2 2
PBT 1,799 1,828 1,783 2,005
Net fixed assets 2,168 3,019 3,196 3,357
Extra-ordinary 75 100 0 0 Investments 3,392 2,844 2,844 2,844
PBT after ext-ord. 1,724 1,728 1,783 2,005 Debtors 834 814 965 1,041
Inventories 1,301 1,380 1,399 1,473
Tax 279 280 289 326
Cash & bank balance 328 811 1,704 2,728
Rate (%) 16.2% 16.2% 16.2% 16.2% Loans & advances & other
PAT 1,445 1,448 1,494 1,679 CA 415 508 808 851
Total current assets 2,877 3,491 5,194 6,512
Share of profit/(loss) of associates
for the year 1 0 0 0 Current liabilities 2,032 1,994 2,243 2,337
Provisions 190 228 228 228
Consolidated PAT 1,446 1,448 1,494 1,679 Net current assets 655 1,268 2,723 3,947
Change (%) 6.8% 0.1% 3.2% 12.4% Total Assets 6,215 7,131 8,763 10,149

Cash Flow Statement (Rs Cr) Key Ratios

Year End-March FY19 FY20 FY21E FY22E Year End-March FY19 FY20 FY21E FY22E

PBT 1,799 1,828 1,783 2,005 Per share (Rs)

EPS 8.2 8.2 8.5 9.5
Depreciation 177 220 222 238
CEPS 9.2 9.4 9.7 10.9
Interest & others -236 -256 -228 -228 BVPS 31.9 37.4 44.8 51.9
Cash flow before WC changes 1,741 1,792 1,777 2,016 DPS 2.0 1.6 2.1 2.4
(Inc)/dec in working capital -8 -157 -221 -100 Payout (%) 24.2% 19.5% 25.0% 25.0%
Operating CF after WC Valuation (x)
changes 1,732 1,635 1,556 1,915 P/E 60.1 60.0 58.2 51.8
Less: Taxes -279 -280 -289 -326 P/CEPS 53.5 52.1 50.7 45.3
Operating cash flow 1,454 1,355 1,267 1,589 P/BV 15.4 13.2 11.0 9.5
EV/EBITDA 49.0 47.2 47.3 41.3
(Inc)/dec in F.A + CWIP -28 -482 -399 -399
Dividend Yield (%) 0.4% 0.3% 0.4% 0.5%
(Pur)/sale of investment 410 96 0 0
Return ratio (%)
Cash flow from investing 382 -386 -399 -399 EBIDTA Margin 20.4% 20.6% 20.2% 21.7%
Free cash flow (FCF) 1,426 873 868 1,190 PAT Margin 16.9% 16.6% 17.0% 18.1%
Loan raised/(repaid) -305 -57 324 126 ROE 25.7% 21.9% 18.9% 18.3%
Equity raised 0 0 0 0 ROCE 25.1% 22.0% 17.8% 17.5%
Leverage Ratio (%)
Interest & others -1,088 -1,120 -1,234 -1,133
Total D/E 0.2 0.1 0.1 0.1
Dividend -351 -283 -374 -420
Net D/E 0.0 -0.1 -0.1 -0.2
Cash flow from financing
Turnover Ratios
activities -1,814 -486 25 -167
Asset Turnover (x) 1.4 1.2 1.0 0.9
Net inc /(dec) in cash 22 482 893 1,024
Inventory Days 56 58 58 58
Opening balance of cash 306 328 811 1,704 Receivable Days 36 34 40 41
Closing balance of cash 328 811 1,704 2,728 Payable days 95 93 93 92

Source: Arihant Research, Company Filings, Ace Equity, Bloomberg

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Q1FY21 - Result Update| Dabur India Ltd.

Arihant Research Desk

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