4QFY2013 Result Update | FMCG

May 6, 2013

Dabur India
Performance Highlights
Quarterly Data (Consolidated)
(` cr) Revenue EBITDA OPM (%) PAT 4QFY13 1,531 260 17.0 201 4QFY12 1,364 215 15.8 171 % yoy 12.3 20.9 121bp 17.6 3QFY13 1,631 269 16.5 211 % qoq (6.1) (3.3) 49bp (5.0)

NEUTRAL
CMP Target Price
Investment Period
Stock Info Sector Market Cap (` cr) Net Debt (` cr) Beta 52 Week High / Low Avg. Daily Volume Face Value (`) BSE Sensex Nifty Reuters Code Bloomberg Code FMCG 27,495 137 0.2 162/101 134,348 1 19,674 5,971 DABU.BO DABUR@IN

`158 -

Source: Company, Angel Research

For 4QFY2013, Dabur India (Dabur) posted a 12.3% yoy growth in its consolidated top-line. The companys net profit rose by 17.6% yoy to `201cr, in-line with estimates, aided by strong operational performance. Key highlights: The domestic consumer business posted a 15.1% yoy growth

with volume growth coming in at 12.3%. In terms of category, Foods grew by

22.6% yoy while Home care grew by 33.3% yoy. The Hair care portfolio grew by 9.6% yoy, with Shampoos growing by 29.4% yoy. The companys international

business posted a growth of 11.6%, with the organic international business posting a growth of 19.7% yoy. The OPM stood at 17.0%, up 121bp yoy, led by a healthy expansion in gross margins due to reduction in commodity costs and also lower advertising and promotion expenditure as a percentage of sales
which fell by 90bp yoy to 12.5%. Finance costs rose by 161.9% yoy to `15cr. Outlook and valuation: We expect Daburs top-line to post an ~16.5% CAGR over FY201315E. The bottom-line is expected to post a 19.5% CAGR, aided by top-line growth and margin expansion. At the current market price, the stock is trading at 25.1x FY2015E EPS. We recommend Neutral on the stock. Key Financials (Consolidated)
Y/E March (` cr) Net sales % chg Net profit (Adj.) % chg EBITDA (%) EPS (`) P/E (x) P/BV (x) RoE (%) RoCE (%) EV/Sales (x) EV/EBITDA (x)
Source: Company, Angel Research

Shareholding Pattern (%) Promoters MF / Banks / Indian Fls FII / NRIs / OCBs Indian Public / Others 68.7 5.1 19.9 6.3

Abs. (%) Sensex Dabur

3m 18.4

1yr 47.6

3yr 15.8 67.3

(0.5) 16.9

FY2012 5,284 28.5 644 12.4 16.4 3.7 42.6 16.0 41.4 28.7 5.2 31.9

FY2013E 6,146 16.3 770 19.6 16.3 4.4 35.8 12.9 40.1 28.7 4.5 27.8

FY2014E 7,183 16.9 939 21.8 16.8 5.4 29.4 11.5 41.5 32.5 3.8 22.9

FY2015E 8,340 16.1 1,099 17.1 16.8 6.3 25.1 8.9 40.1 34.8 3.3 19.5

V Srinivasan
022-39357800 Ext: 6831 v.srinivasan@angelbroking.com

Please refer to important disclosures at the end of this report

Dabur India | 4QFY2013 Result Update

Exhibit 1: Quarterly Performance (Consolidated)

Y/E March (` cr) Net Sales Consumption of RM (% of Sales) Staff Costs (% of Sales) Advertising (% of Sales) Other Expenses (% of Sales) Total Expenditure Operating Profit OPM Interest Depreciation & Amortisation Other Income PBT (excl. Extr Items) Extr Income/(Expense) PBT (incl. Extr Items) (% of Sales) Provision for Taxation (% of PBT) PAT (Before Minority) Minority Interest Reported PAT PATM Equity shares (cr) FDEPS (`)
Source: Company, Angel Research

4QFY13 1,531 740 48.3 121 7.9 192 12.5 218 14.2 1,271 260 17.0 15 28 36 253 253 16.5 51 20.1 202 1.5 201 13.1 174 1.2

4QFY12 1,364 685 50.2 96 7.0 182 13.4 186 13.6 1,148 215 15.8 6 29 28 208 208 15.3 38 18.1 171 0.0 171 12.5 174 1.0

% yoy 12.3 8.0 26.4 5.4 17.4 10.7 20.9 121bp 161.9 (4.0) 26.8 21.3 21.3 34.4 18.4 17.6

3QFY13 1,631 795 48.8 123 7.5 235 14.4 208 12.8 1,361 269 16.5 8 31 27 258 258 15.8 48 18.5 210 (0.6) 211 12.9 174

% qoq (6.1) (7.0) (1.7) (18.3) 4.8 (6.7) (3.3) 49bp 92.5 (7.7) 30.2 (2.1) (2.1) 6.1 (4.0) (5.0)

FY2013 6,146 3,019 49.1 471 7.7 837 13.6 823 13.4 5,151 995 16.2 59 112 124 948 948 15.4 183 19.3 766 2.4 763 12.4 174

FY2012 5,283 2,692 51.0 387 7.3 660 12.5 676 12.8 4,415 868 16.4 54 103 80 790 790 15.0 146 18.5 644 (0.8) 645 12.2 174 3.7

% chg 16.3 12.1 21.6 26.9 21.8 16.7 14.7 (23) 9.4 8.9 56.1 20.0 20.0 24.8 18.9 18.4

17.6

1.2

(5.1)

4.4

18.4

Exhibit 2: 4QFY2013 Actual vs Angel estimates

(` cr) Net Sales Operating Profit OPM (%) Net Profit
Source: Company, Angel Research

Actual 1,531 260 17.0 201

Estimates 1,581 251 15.9 202

Variation (%) (3.1) 3.6 110bp (0.7)

May 6, 2013

Dabur India | 4QFY2013 Result Update

Top-line up 12.3% yoy

Dabur posted a strong top-line growth of 12.3% yoy to `1,531cr. Volume growth in the domestic Consumer business stood at 12.3%. In terms of category, Foods grew by 22.6% yoy while Home care grew by 33.3% yoy. The Hair care portfolio grew by 9.6% yoy, with Shampoos growing by 29.4% yoy. The companys

international business posted a growth of 11.6%, with the organic international business posting a growth of 19.7% yoy. The companys international business posted an 11.6% yoy growth, impacted by compression in Namastes (a subsidiary of Dabur) operations in USA due to restructuring of the brand. The restructuring exercise is now complete with Organic Root Stimulator getting rebranded as ORS. The Management expects the Namaste business to rebound in FY2014. Daburs other subsidiary Hobi performed well aided by continued investment behind brands. The organic international business posted a healthy growth of 19.7% yoy, with constant currency growth coming in at 12.9%. Exhibit 3: Top-line grows 12.3% yoy
1,800 1,600 1,400 1,200 (` cr) 1,000 800 600 1,108 1,205 1,262 1,453 1,364 1,462 1,523 1,631 1,531 400 200 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 40.0 35.0 30.0 (yoy %) 25.0 20.0 15.0 10.0 5.0 -

Exhibit 4: Volume growth at 12.3% yoy

14.0 12.0 10.0 (%) 8.0 6.0 4.0 2.0 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 8.6 12.7 10.0 10.8 12.4 11.0 9.0 9.5 12.3

Top-line (LHS)

yoygrowth (RHS)

Source: Company, Angel Research

Source: Company, Angel Research

Gross margin expands 190bp yoy, OPM up 121bp yoy

The companys OPM for the quarter stood at 17.0% up 121bp yoy led by a healthy expansion in gross margins due to reduction in commodity costs. Gross margin for the company rose by 190bp on a yoy basis. The companys advertising and promotion expenditure as a percentage of sales fell by 90bp yoy to 12.5%. The Consumer care business posted an 18.6% yoy growth in profit to `295cr. However, the profits of the Foods business declined by 3.5% yoy to `30cr due to increase in input costs.

Net profit grows by 17.6% yoy

Daburs reported net profit for the quarter grew 17.6% yoy to `201cr, aided by a strong operational performance. Finance costs rose by 161.9% yoy to `15cr. Tax rate rose by 200bp yoy to 18.1%.

May 6, 2013

Dabur India | 4QFY2013 Result Update

Exhibit 5: OPM up by 121bp yoy

60.0 50.0 40.0 (%) 30.0 19.1 20.0 10.0 11.5 4Q11 1Q12 14.2 12.6 18.7 15.2 13.6 3Q12 15.8 14.1 15.7 1Q13 17.4 16.5 17.0 53.0 47.8 50.0 49.0 49.8 50.0 50.6 51.2 51.7

Exhibit 6: Healthy 17.6% yoy growth in Net Profit

260 210 160 110 147 128 174 173 171 149 60 11.9 2Q13 14.4 3Q13 12.5 4Q13 10 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 25.0 20.0 (yoy %) 15.0 10.0 5.0 -

(` cr)

202

211

10.1 2Q12

13.4 4Q12

OPM

Gross margin

A&P Spends/Sales

PAT (LHS)

yoy growth (RHS)

Source: Company, Angel Research

Source: Company, Angel Research

Exhibit 7: Segment-wise performance (Consolidated)

Y/E Mar (` cr) Total Net Sales Consumer Care Foods Business Retail Others Total PBIT Consumer Care Foods Business Retail Others PBIT Margin (%) Consumer Care Foods Business Retail Others 4QFY13 4QFY12 % chg 3QFY13 1,531 1,290 192.7 15.8 32.9 326 295.0 30.2 (1.4) 2.0 21.3 22.9 15.7 (8.8) 6.1 1,364 1140 161.3 12.25 277 248.7 31.3 (2.9) 20.4 21.8 19.4 (23.9) 1.0 12.3 13.1 19.4 29.2 17.4 18.6 (3.5) 1,631 1,414 164.9 16.8 35.4 339 323.6 18.1 (2.7) 20.8 22.9 11.0 (16.4) 0.4 % chg FY13 FY12 % chg 16.3 14.5 23.7 41.5 18.0 18.6 3.6 0.0 (6.1) 6,146 5,283 -8.8 5,142 4,490 16.8 -5.5 -7.1 (3.9) -8.8 66.5 745 60 200 1268 1148 115 (10) 15 20.6 22.3 15.4 7.5 602 42 1075 968 111 (12) 20.3 21.6 18.4 4.9

50.0 (34.2)

0.5 284.6

0.1 1438.5

201

149 105.9

7 103.4

(15.9) (27.4)

Source: Company, Angel Research

May 6, 2013

Dabur India | 4QFY2013 Result Update

Investment rationale
Niche positioning to drive growth: Daburs niche ayurvedic/herbal based positioning offers it an attractive and unique proposition in terms of product portfolio. We believe this niche positioning will drive the companys growth going ahead. Acquisition rationale: The acquisition of Hobi and Namaste groups provides Dabur entry into an attractive new market. The integration of Hobi Group and Namaste Group is complete and their portfolio has been extended across geographies.

Outlook and valuation

We expect Daburs top-line to post an ~16.5% CAGR over FY201315E. The bottom-line is expected to post a 19.5% CAGR over the same period, aided by top-line growth and margin expansion. At the current market price, the stock is trading at 25.1x FY2015E EPS. We recommend Neutral on the stock.

Exhibit 8: Peer valuation

Company Asian Paints Britannia Colgate Dabur GCPL GSKCHL* HUL ITC Marico Nestle* Tata Global Reco Neutral Neutral Neutral Neutral Neutral Neutral Neutral Neutral Neutral Neutral Neutral Mcap (` cr) 46,576 6,904 20,551 27,455 28,209 16,997 123,976 255,114 14,087 47,162 9,121 CMP (`) 4,856 578 1,511 158 829 4,042 573 326 219 4,891 148 TP (R`) Upside (%) P/E (x) FY14E 33.8 28.5 33.8 29.4 31.3 33.5 33.6 29.4 27.6 37.2 18.7 FY15E 28.5 23.0 29.1 25.1 26.0 27.6 31.2 25.1 22.3 30.6 16.9 EV/Sales (x) FY14E 3.4 1.0 5.5 3.8 3.7 4.3 4.1 7.2 2.6 4.7 1.0 FY15E 2.7 0.8 4.7 3.1 3.1 3.4 3.5 5.8 2.1 4.0 0.5 RoE (%) FY14E 35.0 37.4 98.3 41.5 26.5 33.7 113.4 35.5 22.8 58.8 9.5 FY15E 32.7 37.3 88.0 40.1 25.9 33.4 87.0 34.1 22.9 69.5 9.8 CAGR # Sales 18.8 15.5 15.1 16.5 18.8 17.6 14.7 15.3 14.8 16.7 10.0 EPS 18.0 22.0 17.4 19.5 22.2 18.7 11.7 16.6 23.3 18.4 13.0

Source: Company, Angel research; Note: # Denotes CAGR over FY2013-15E, *December Year Ending.

May 6, 2013

Dabur India | 4QFY2013 Result Update

Exhibit 9: One year forward PE

50.0 45.0 40.0 35.0 30.0 25.0 20.0 15.0 10.0 5.0 Nov-08 Nov-09 Nov-10 Nov-11 Nov-12 Feb-09 Feb-10 Feb-11 Feb-12 May-08 May-09 May-10 May-11 May-12 Feb-13 May-13 Aug-08 Aug-09 Aug-10 Aug-11 Aug-12 (x)

Source: Company, Angel Research Note: Blue line indicates 5 year average PE

Company Background
Dabur is a leading Indian FMCG company, offering products in the hair oil, shampoo, oral care, home care, skin care, foods and healthcare categories. The company has many iconic brands such as Dabur, Vatika, Hajmola, Real and Fem. The company has 17 manufacturing facilities, with a presence in over 60 countries. The company is currently headed by Mr Sunil Duggal.

May 6, 2013

Dabur India | 4QFY2013 Result Update

Profit & Loss Statement (Consolidated)

Y/E March (` cr) Total operating income % chg Total Expenditure Cost of Materials Advertising Exp Personnel Others EBITDA % chg (% of Net Sales) Depreciation& Amortisation EBIT % chg (% of Net Sales) Interest & other Charges Other Income (% of PBT) Share in profit of Associates Recurring PBT % chg Prior Period & Extr. Exp./(Inc.) PBT (reported) Tax (% of PBT) PAT Less: Minority interest Recurring PAT % chg (% of Net Sales) Basic EPS (`) Fully Diluted EPS (`) % chg FY2010 FY2011 FY2012 FY2013 3,390 20.9 2,761 1,551 493 285 432 629 33.7 18.6 56 573 36.0 16.9 20 48 8.8 601 35.1 2 599 100 16.7 498 (0.8) 501 28.1 14.8 5.8 2.9 28.1 4,077 20.3 3,341 1,938 535 309 561 736 17.0 18.1 82 654 14.2 16.0 30 55 10.5 679 13.0 679 139 20.5 540 0.3 540 7.7 13.2 3.3 3.3 14.3 5,325 30.6 4,415 2,685 660 387 683 910 23.6 17.1 103 807 23.3 15.1 54 79 8.0 832 22.6 832 146 17.6 686 (0.8) 687 27.2 12.9 3.7 3.7 12.6 6,196 16.4 5,146 3,019 837 471 819 1,050 15.4 16.9 112 937 16.2 15.1 59 124 8.1 1,003 20.5 5 998 183 18.2 816 2.4 818 19.1 13.2 4.4 4.4 19.1 FY2014E 7,183 15.9 5,979 3,441 1,006 567 965 1,204 14.7 16.8 112 1,092 16.5 15.2 48 129 9.5 1,173 17.0 1,173 235 20.0 939 (0.8) 939 14.9 13.1 5.4 5.4 21.9 FY2015E 8,340 16.1 6,941 3,995 1,168 659 1,120 1,399 16.2 16.8 130 1,269 16.2 15.2 38 142 12.4 1,373 17.1 1,373 275 20.0 1,099 0.3 1,098 16.9 13.2 6.3 6.3 17.1

May 6, 2013

Dabur India | 4QFY2013 Result Update

Balance Sheet (Consolidated)

Y/E March (` cr) SOURCES OF FUNDS Equity Share Capital Preference Capital Reserves& Surplus Shareholders Funds Minority Interest Total Loans Deferred Tax Liability Total Liabilities APPLICATION OF FUNDS Gross Block Less: Acc. Depreciation Net Block Capital Work-in-Progress Investments Long term loans and adv. Current Assets Cash Loans & Advances Other Current liabilities Net Current Assets Mis. Exp. not written off Total Assets 1,106 192 367 546 920 186 3 1,129 1,871 280 467 1,064 1,458 413 101 2,465 986 339 647 30 264 1,934 435 1,499 32 420 2,145 503 1,641 27 483 433 2,400 448 154 1,286 1,751 648 72 2,871 2,229 616 1,613 61 632 300 2,430 513 230 1,328 1,412 1,018 3,324 2,660 727 1,933 67 732 300 2,989 610 523 1,556 2,322 668 3,399 3,089 857 2,232 77 832 301 3,358 619 632 1,807 2,613 745 3,886 87 848 935 4 179 11 1,129 174 1,217 1,391 4 1,051 19 2,465 174 1,543 1,717 3 1,123 27 2,871 174 1,950 2,124 12 1,151 36 3,324 174 2,225 2,399 12 951 36 3,399 174 2,912 3,086 12 751 36 3,886 FY2010 FY2011 FY2012 FY2013E FY2014E FY2015E

May 6, 2013

Dabur India | 4QFY2013 Result Update

Cash flow statement (Consolidated)

Y/E March (` cr) Profit before tax Depreciation Change in Working Capital Interest / Dividend (Net) Direct taxes paid Others Cash Flow from Operations (Inc.)/ Dec. in Fixed Assets (Inc.)/ Dec. in Investments Cash Flow from Investing Issue of Equity Inc./(Dec.) in loans Dividend Paid (Incl. Tax) Interest / Dividend (Net) Cash Flow from Financing Inc./(Dec.) in Cash Opening Cash balances Closing Cash balances FY2010 601 56 (48) 12 100 (11) 510 (134) (104) (238) (14) (51) 151 12 (228) 44 148 192 FY2011 FY2012 FY2013E FY2014E FY2015E 712 82 (135) 10 139 35 565 (950) (156) (1,106) 872 233 10 629 88 192 280 790 103 (66) 5 146 (33) 653 (205) (63) (268) 12.33 72 297 5 (218) 168 280 448 953 112 (376) 19 183 206 732 (119) (149) (268) 0.08 28 408 19 (399) 65 448 513 1,173 112 345 7 235 (153) 1,250 (437) (100) (537) (200) 408 7 (615) 98 513 610 1,373 130 (68) (3) 275 (5) 1,153 (439) (100) (539) (200) 408 (3) (605) 8 610 619

Note: Some of the figures from FY2011 onwards are reclassified; hence not comparable with previous year numbers

May 6, 2013

Dabur India | 4QFY2013 Result Update

Key ratios (Consolidated)

Y/E March Valuation Ratio (x) P/E (on FDEPS) P/CEPS P/BV Dividend yield (%) EV/Sales EV/EBITDA EV / Total Assets Per Share Data (`) EPS (Basic) EPS (fully diluted) Cash EPS DPS Book Value Returns (%) RoCE Angel RoIC (Pre-tax) RoE Turnover ratios (x) Asset Turnover Inventory / Sales (days) Receivables (days) Payables (days) Net Working capital (days) 3.4 46 13 50 (1) 2.1 63 32 66 12 2.5 57 32 64 14 2.5 49 30 70 30 2.7 49 30 58 3 2.7 49 30 58 6 52.3 51.6 57.1 38.2 35.4 49.3 28.7 27.1 41.4 28.7 27.4 40.1 32.5 31.2 41.5 34.8 33.5 40.1 5.8 2.9 6.4 2.0 10.8 3.3 3.3 3.8 1.2 8.0 3.7 3.7 4.3 1.5 9.9 4.4 4.4 5.1 2.0 12.2 5.4 5.4 6.0 2.0 13.8 6.3 6.3 7.0 2.0 17.7 54.8 24.6 14.7 1.3 8.1 43.7 24.3 48.0 41.9 19.7 0.7 6.9 36.7 11.5 42.6 36.8 16.0 1.0 5.2 31.9 9.7 35.8 31.1 12.9 1.3 4.5 27.8 8.4 29.4 26.2 11.5 1.3 3.8 22.9 8.1 25.1 22.4 8.9 1.3 3.3 19.5 7.0 FY2010 FY2011 FY2012 FY2013 FY2014E FY2015E

May 6, 2013

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Dabur India | 4QFY2013 Result Update

Research Team Tel: 022 - 39357800

E-mail: research@angelbroking.com

Website: www.angelbroking.com

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Disclosure of Interest Statement 1. Analyst ownership of the stock 2. Angel and its Group companies ownership of the stock 3. Angel and its Group companies' Directors ownership of the stock 4. Broking relationship with company covered

Dabur India No No No No

Note: We have not considered any Exposure below ` 1 lakh for Angel, its Group companies and Directors

Ratings (Returns):

Buy (> 15%) Reduce (-5% to -15%)

Accumulate (5% to 15%) Sell (< -15%)

Neutral (-5 to 5%)

May 6, 2013

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