May 05, 2012, 10.44 AM | Source: Moneycontrol.com
Prabhudas Lilladher is bullish on Dabur India and has recommended accumulate rating on the stock with a target of Rs 120 in its May 1, 2012 research report.
, Prabhudas Lilladher |
“Dabur’s Q4FY12 sales, EBITDA and PAT came in at Rs13.6bn (up 23% YoY), Rs2.15bn (up 2% YoY) and Rs1.71bn (up 16% YoY), as against our expectations of Rs13.6bn, Rs2.15bn and Rs1.59bn, respectively. While the headline reported numbers are in line, the quality of growth is slightly weak, with higher other income (up 27%) and forex gains driven lower interest costs (down 64% YoY) driving 11% PBT growth. Consol and domestic volumes posted healthy 12% and 9.5% growth, clearly benefitting from the recent pick up in adspends as well as strategic initiatives on rural as well as distribution front. Hair Care, Skin Care, Foods and Home outperformed, while Oral Care disappointed. While volumes have seen a pick up, margin pick up remains elusive as yet. International organic sales delivered 45.8% growth (35% in constant currency). Hobi and Namaste registered 22% and 15.6% growth, respectively and posted FY12 revenues of Rs6.9bn FY12.”
“Consolidated gross margins declined 320bps (up 80bps QoQ). ASP spends followed Q3 trajectory, up 43%, as Dabur continued to drive the focus on volume growth after relatively quiet H1FY12. Standalone operating margins declined 500bps, implying better YoY profitability in international business. Operating margins are up nearly 170bps for international business, in our estimates. Continued recovery in volume growth was a key positive from Q4FY12. We see further pick up ahead once the benefits from rural distribution initiatives start flowing in. However, progress on gross margin improvement remains sluggish. We retain our estimates and roll forward our model to FY14e. Maintain ‘Accumulate’, with March-13 TP of Rs120 (23x FY14e),” says Prabhudas Lilladher research report.
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