Accumulate Dabur India; target of Rs 145: R K Global

RK Global is bullish on Dabur India and has recommended accumulate rating on the stock with a target of Rs 145 in its October 6, 2012 research report.

“Dabur India reported a ~19% YoY in revenue growth (~1.5% down from our estimates), while its profit rose by ~37% on a YoY basis. However, on a sequential basis, revenue grew by ~2%, while net profit grew by an impressive ~30%. Numbers growth was a combination of volume growth (~10.5%), price increases & marginal translation gains. Domestic FMCG business reported growth of ~15%, which was driven by decent volume growth of ~9%. The overall sales growth was driven by combination of innovation, relentless market development initiatives and stronger growth across key categories like Health Supplements, Shampoos, Skin Care, Home Care and OTC & Ethical. However, some categories like Hair Oil & Oral Care disappointed, reporting slower growth.”
“Sales growth was a combination of volume growth (~10.5%), price increases and marginal translation gains. Domestic FMCG business reported growth of ~15%, which was driven by decent volume growth of ~9%. International Business grew by ~24.8% with distribution restructuring in Africa and changeover in branding in US. Hobi business performed well with strong growth in revenue in its domestic as well as overseas markets driven by investment behind brands and distribution expansion.”
“Dabur's expansion can provide staggered volume benefits in Q3-Q4FY’13E and FY’14. Investments in new brands (acquisition mainly) are expected to aide good volume growth momentum for the company. However, continued underperformance in hair oil and oral care remains a concern. We upgrade Dabur India to accumulate revising our earlier TP of Rs122, to Rs145 (~15% potential return from CMP). At CMP, the stock trades at a P/E and P/BV of ~31.7x and ~11.5x respectively of FY’13E EPS and BVPS. Our TP is arrived by P/E of ~36.2x and P/BV of ~13.2x, using FY’13E EPS of Rs4 and BVPS of Rs11,” says R K Global research report. Bodies Corporate holding more than 50% in Indian cos Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions. To read the full report click on the attachment

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