1. Should you buy Dabur India post its Q4 results?

Should you buy Dabur India post its Q4 results?

Dabur India announced the fourth quarter results on Monday and posted a net profit of Rs 333.11 crore for the quarter ended March 31 as compared to net profit of Rs 331.48 crore in the January-March period of the last fiscal.

By: | Published: May 2, 2017 3:36 PM
dabur india Dabur India announced the fourth quarter results on Monday and posted a net profit of Rs 333.11 crore for the quarter ended March 31 as compared to net profit of Rs 331.48 crore in the January-March period of the last fiscal. (Photo: Reuters)

Dabur India announced the fourth quarter results on Monday and posted a net profit of Rs 333.11 crore for the quarter ended March 31 as compared to net profit of Rs 331.48 crore in the January-March period of the last fiscal. Its total income for the period under review stood at Rs 1,979.72 crore as against Rs 2,063.93 crore in the corresponding quarter a year ago, down 4.08 per cent. The total expense of the company were down 5.81 per cent to Rs 1,548.32 crore as against Rs 1,643.83 crore.

Shares of Dabur India were trading 0.70 per cent down at Rs 284.55. The BSE Sensex was trading 16.93 points up at 29,935.33.

Brokerage House Edelweiss Research after analysing its fourth quarter results has maintained a ‘Buy’ rating on the stock with a target price of Rs 327. It believes the company will bounce back and there will be a recovery in volumes and premiumisation on the back of new launches and ayurvedic focus. It further added that uptick in rural spending and government’s stimulus remain key triggers. The company is gaining market shares in key categories—oral care, hair care, home care, skin, foods—is a positive and we envisage it to be key beneficiary of increasing herbal trend.

The brokerage house said,”Dabur India’s (Dabur) Q4FY17 revenue (down 4.8% YoY) came in line, while EBITDA and PAT (flattish YoY) surpassed estimates led by better-than-expected margin. Despite strong base of 7% YoY, domestic volumes jumped 2.4% YoY (down 5.0% YoY in Q3FY17). Gross margin dipped by 163bps YoY, but EBITDA margin surged 115bps YoY led by 136bps YoY savings in ad spends and 100bps and 42bps YoY savings in staff and other expenses, respectively.”

The key takeways from Dabur India’s conference call post results made following observations: GST will lead to destocking in Q1FY18—Dabur and distributors are largely ready for implementation, but lower down the chain preparedness is weak. The company’s rural growth surpassed overall growth in Q4FY17. Dabur has started regaining some of the lost share in honey; it believes the worst is behind in terms of competition from Patanjali. Shampoo portfolio continued to remain under pressure due to impact on wholesale channel—shifted Vatika to ayurvedic from current herbal positioning.

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