Recurring PAT at Rs. 170 crore (+16% Y/Y) was slightly above our R162 crore estimate, though the quality of the beat was poor driven by lower interest expenses & taxes. R215 crore Ebitda was in line with estimates, as margins compressed on account of A&P, coupled with slightly higher material costs (GM of 50%, up 1ppt over 3Q).
Domestic revenue growth of 19% y-o-y appears to have been driven by volume growth, rather than price/mix.
Management expects mid-high teens revenue growth, driven by double-digit volume growth.
Unlike Q3FY12, management noted rural India offtake was robust. ?Operation Double?, which will double the direct reach in rural India, has been extended to 10 states now (versus 2 in 1HFY12) and should hit a target of 15 states soon (which accounts for 80% of Dabur?s business). This should spur volume growth over 2HFY13/14.
In contrast to Q3, the outlook on margins appears a bit subdued. Management will undertake calibrated price hikes, which might not fully offset cost pressures.
In some categories (shampoos/oral care) the price hikes have been modest as the category leaders haven?t increased prices. Within foods (fruit juices), the input cost (concentrates) has risen and margins are further pressured by the weak exchange rate.
Over FY12, IBD revenues reported organic growth of 27% y-o-y (23% in constant currency), with GCC, Egypt and Nigeria growing >25%.
Key growth categories remain hair/oral care and hair creams. Integration of Hobi/Namaste acquisitions remains on track ? revenues of both businesses aggregated R680 crore in FY12. Some regional cross pollination has commenced ? eg., Hobi products were introduced in MENA / India in MT formats.
Management noted that competitive intensity in hair / oral care remains intense, but is stabilising.
In hair care, revenue growth is robust (+17%y-o-y) as the price cuts of FY11 are now in the base.
Dabur continues to maintain / improve share in key categories.
Citi