Dabur Q1FY24 Revenue Hits 3,130 Cr Amid Lower Inflation
Company Overview:
Dabur India Ltd, with a rich legacy of 138 years, stands as a prominent player in the fast-moving consumer goods (FMCG) industry. It boasts a diverse portfolio encompassing Health Care, Home and Personal Care, and Food and Beverages products. Dabur is recognized as the 4th largest FMCG company in India and the world’s largest ayurvedic and healthcare company, offering a portfolio of over 250 herbal/ayurvedic products. The company’s expansive distribution network covers 7.7 million retail outlets, extending its reach into both urban and rural markets.
Industry Overview:
The FMCG sector in India plays a pivotal role in the country’s economy. Notably, it continued to exhibit robust growth, even during the challenging years of the COVID-19 pandemic. Dabur benefited from a consumer shift towards natural healthcare products during this period. However, inflation and central bank interest rate decisions have presented challenges, impacting volume growth.
Strong Global Presence through robust distribution reach:
Dabur’s global reach is extensive, with products distributed to 120+ countries across four continents. This impressive reach is facilitated by 28 warehouses and 3000+ distributors in India alone. The company’s manufacturing infrastructure comprises 13 sites in India and 8 overseas locations. Notably, Dabur expanded its operations by acquiring a 51% stake in Badshah Masala, increasing its total manufacturing sites in India to 14.
Business Segments:
A Consumer Care Business: This SBU includes Health Care (HC) and Home and Personal Care (HPC) segments, contributing to 56.2% of Consolidated Sales.
Food & Beverages (F&B) Business: Comprising fruit-based beverages and a range of food products, this segment expanded with the addition of spices through the acquisition of Badshah Masala. It accounts for 15.1% of Consolidated Sales.
International Business: This segment combines Dabur’s organic overseas business with acquired entities such as Hobi Group and Namaste Laboratories LLC, making up 25.1% of Consolidated Sales. Dabur has significant market shares in various categories, including healthcare supplements, oral care, hair oil, and fruit juice.
The company has a 63.20% market share in healthcare supplements (chyawanprash), 17% in the oral care (toothpaste) segment, and 16.3% in the hair oil segment. It is a market leader in the fruit juice segment around 16.20% market share with its real and active brands.
Valuation and Key Ratios:
Dabur’s stock is currently trading at a multiple of 56.5x EPS of 9.77, with a market price of 547, while the industry PE stands at 40.5x. The stock is valued at 10.8 times its book value of 50.6 Rs per share. The company demonstrates robust return ratios, with ROE at 19.5% and ROCE at 22.7%. Moreover, the interest coverage ratio stands at 25.9%, indicating that the company’s earnings are significantly higher than its interest costs, reflecting a strong financial position. The EV/EBITDA ratio stands at 36.5x.
Q1FY24 Results Update:
In Q1FY24, Dabur reported a 10.91% YoY increase in revenue to 3,130 Cr, driven by increased sales volume due to reduced inflation in Q2, which boosted demand for consumer goods. EBITDA grew by 11.23% YoY and 47.55% QoQ to 605 Cr, with EBITDA margins remaining steady at 19.32%. This performance was despite rising raw costs and operating expenses. The company achieved a PAT of 457 Cr, reflecting a 3.53% YoY growth and a significant 55.97% QoQ increase. However, PAT margins witnessed a slight YoY decline of 100 bps, while they increased by 360 bps QoQ. The EPS for the quarter stood at 2.58 Rs, marking a 3.53% YoY growth.
Conclusion:
Dabur India Ltd, with its long-standing history, diverse product portfolio, extensive distribution network, and strong financial performance, continues to be a formidable player in the FMCG sector. Despite challenges such as inflation and interest rate fluctuations, the company has demonstrated resilience and growth, as evident from its Q1FY24 results. Investors may find Dabur an attractive proposition given its strong market position and financial stability.
