buy overhaul visible industry fmcg cmp rs 481 target price...

RESULTS REVIEW 2QFY20 05 NOV 2019

Dabur India BUY

Overhaul visible Dabur reported an in-line show amidst weak consumer demand in rural. Ex-foods, domestic volume growth of 7.4% is commendable. Mohit’s (new CEO) strategies and execution is visible in 1HFY20 performance wherein Dabur has outperformed the market (vs. riding with the tide). We raise estimates by 2-3% and value Dabur at 40x on Sep-21E EPS, arriving at a TP of Rs 511. Maintain BUY. HIGHLIGHTS OF THE QUARTER Domestic revenue/volume grew at 4.9/4.8% (10/8% in

2QFY19) vs. our exp of 6/5%. Dabur’s rural growth outpaced urban growth owing to distribution expansion (direct reach at 51k villages vs. 49k in 1QFY20). This is in contrast to the sector. HUL and Marico reported weaker rural growth vs. urban. To combat liquidity stress, Dabur provided additional credit to select distributors. We believe growth trajectory has bottomed out in 2Q and expect gradual volume acceleration hereon.

Hair and PC/Health Care/Foods grew at 4/11/-5%. Dabur gained healthy market share in categories like Oral care/Shampoo/Hair oil/Juices by 66/65/30/420bps respectively. Health care portfolio (~32% of domestic revenues) continues to drive overall growth led by (1) Market share gains in Chyawanprash and Glucose, (2) Distribution expansion and (3) New launches.

Beverages performance remains as a key pain point for the co as consumers are downtrading to lower priced

substitutes (aerated drinks and dairy beverages vs. juices). Co has launched Rs 10 pack beverages (Real ORS and Real Koolerz Mango) so as to expand its portfolio with more variants at competitive prices.

International business (28% revenue mix) grew by 2% (3% cc growth) owing to sharp decline in Nepal (-35%). Management remains confident to deliver mid-high single digit revenue growth.

GM expanded by 142bps owing to benign commodity inflation and richer mix. Employee/A&P/Other expenses grew by 3/8/8%. Adjusted EBITDA (IND AS-116) grew by 7% and EBITDAM expanded by 48bps to 21.7% (in-line). APAT grew by 15% to Rs 4.34bn vs. exp of Rs 4.19bn. Beat in APAT was led by lower ETR.

STANCE

Dabur has delivered in a tough environment as its initiatives are beginning to pay dividends. Mohit is focusing on (a) Scaling power brands (8 brands with 65% revenue mix) which have a large addressable opportunity and (b) Deeper rural penetration led by higher direct reach (targeting 55k villages in FY20). While beverage market share is at all time-high, recovery in growth is critical for Dabur to outperform. Our conviction in recovery in volume growth is led by pick-up in transfers of PM-kisan scheme, normal monsoons and favorable base.

Financial Summary YE March (Rs mn) 2QFY20 2QFY19 YoY (%) 1QFY20 QoQ (%) FY18 FY19 FY20E FY21E FY22E Net Revenues 22,120 21,250 4.1 22,733 (2.7) 77,219 85,331 92,732 104,140 117,369 EBITDA 4,895 4,508 8.6 4,576 7.0 16,174 17,396 20,408 23,802 27,992 APAT 4,346 3,766 15.4 3,792 14.6 13,663 14,436 16,568 20,577 24,032 Diluted EPS (Rs) 2.46 2.13 15.3 2.15 14.6 7.76 8.20 9.38 11.65 13.60 P/E (x) 61.9 58.6 51.2 41.2 35.3 EV / EBITDA (x) 50.8 47.2 40.1 34.1 28.8 Core RoCE (%) 47.3 50.1 54.8 61.5 68.4

Source: Company, HDFC sec Inst Research

INDUSTRY FMCG CMP (as on 05 Nov 2019) Rs 481 Target Price Rs 511 Nifty 11,917 Sensex 40,248 KEY STOCK DATA Bloomberg DABUR IN No. of Shares (mn) 1,767 MCap (Rs bn) / ($ mn) 851/12,027 6m avg traded value (Rs mn) 922 STOCK PERFORMANCE (%) 52 Week high / low Rs 484/357 3M 6M 12M Absolute (%) 12.0 26.6 31.2 Relative (%) 2.4 23.3 16.1 SHAREHOLDING PATTERN (%) Jun-19 Sep-19 Promoters 67.88 67.88 FIs & Local MFs 7.03 7.74 FPIs 17.76 17.64 Public & Others 7.33 6.74 Pledged Shares 0.00 0.00 Source : BSE

Naveen Trivedi [email protected] +91-22-6171-7324

Siddhant Chhabria [email protected] +91-22-6171-7336

HDFC securities Institutional Research is also available on Bloomberg HSLB <GO>& Thomson Reuters

DABUR INDIA: RESULTS REVIEW 2QFY20

Quarterly Financials Year to March (Rs mn) 2QFY20 2QFY19 YoY (%) 1QFY20 QoQ (%) FY19 FY18 YoY (%) Net Revenue 22,120 21,250 4.1 22,733 (2.7) 85,331 77,219 11.2% Material Expenses 10,885 10,758 1.2 11,477 (5.2) 43,090 38,199 12.8 Employee Expenses 2,415 2,343 3.1 2,314 4.4 9,379 7,928 18.3 Advertisement and Publicity 1,442 1,335 8.0 2,021 (28.7) 6,083 6,067 0.3 Other Operating Expenses 2,482 2,305 7.7 2,344 5.9 9,382 8,850 6.0 EBITDA 4,895 4,508 8.6 4,576 7.0 17,396 16,174 7.6 Adjusted EBITDA (IND-AS 116) 4,799 4,508 6.5 4,576 4.9 17,396 16,174 7.6 Depreciation 545 431 26.4 528 3.3 1,769 1,622 9.1 EBIT 4,351 4,077 6.7 4,049 7.5 15,627 14,552 7.4 Other Income 818 812 0.7 733 11.6 2,962 3,052 (3.0) Interest Cost 152 156 (2.1) 153 (0.1) 596 531 12.2 PBT before exceptional 5,016 4,734 6.0 4,629 8.4 17,993 17,073 5.4 Exceptional (400) - na (200) na 753 145 na PBT 4,618 4,737 (2.5) 4,432 4.2 17,239 16,928 1.8 Tax 582 961 (39.5) 794 (26.8) 2,786 3,354 (16.9) PAT before minority interest 4,036 3,776 6.9 3,638 10.9 14,453 13,574 6.5 Minority Interest 10.6 9.2 15.2 10.6 - -9.6 -2.4 300.0 PAT 4,026 3,766 6.9 3,628 11.0 14,463 13,577 6.5 Adjustment 320 - na 164 na (26) 87 na APAT 4,346 3,766 15.4 3,792 14.6 14,436 13,663 5.7 EPS 2.5 2.1 15.3 2.1 14.6 8.2 7.8 5.7

Margin (% of sales) 2QFY20 2QFY19 YoY (bps) 1QFY20 QoQ (bps) FY19 FY18 YoY (bps) Material Expenses 49.2 50.6 (142) 50.5 (128) 50.5 49.5 103 Employee Expenses 10.9 11.0 (11) 10.2 74 11.0 10.3 72 ASP Expenses 6.5 6.3 24 8.9 (237) 7.1 7.9 (73) Other Operating Expenses 11.2 10.8 37 10.3 91 11.0 11.5 (47) EBITDA 22.1 21.2 92 20.1 200 20.4 20.9 (56) Adjusted EBITDA (IND AS 116) 21.7 21.2 48 20.1 157 20.4 20.9 (56) Tax Rate 12.6 20.3 (769) 17.9 (532) 16.2 19.8 (365) APAT Margin 19.6 17.7 192 16.7 297 16.9 17.7 (78) Source: Company, HDFC sec Inst Research *like-like growth

Domestic business grew by 5% (exp. of 6%) driven by 5% volume growth International biz remained muted and posted 2% growth Consolidated GM expanded by 142bps owing to benign commodity inflation and richer mix Employee/A&P/Other expenses grew by 3/8/8%. Adjusted EBITDAM (IND AS-116) expanded by 48bps to 21.7% (in-line). APAT is adjusted for impairment in the value of treasury investment due to rating downgrade leading to default in repayment

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Quarterly Segmental Year to March (Rsmn) 2QFY20 2QFY19 YoY (%) 1QFY20 QoQ (%) FY19 FY18 YoY (%) Consumer Care Business 18,847 17,767 6.1 18,446 2.2 71,329 64,141 11.2 Foods 2,671 2,894 (7.7) 3,663 (27.1) 11,586 10,977 5.5 Retails 292 283 3.1 323 (9.6) 1,244 1,143 8.8 Others 246 235 4.6 237 3.8 893 970 (8.0) Unallocated other operating revenue 64 71 (9.6) 64 (0.3) 279 252 10.8 Total 22,120 21,250 4.1 22,733 (2.7) 85,331 77,483 10.1 Segmental EBIT Consumer Care Business 5,008 4,526 10.6 4,337 15.5 17,482 15,961 9.5 Foods 366 485 (24.6) 544 (32.8) 1,755 1,581 11.0 Retails (2) 6 na 7 (124.2) 41 31 na Others 17 23 (26.3) 17 - 73 28 159.8 Total 5,389 5,040 6.9 4,904 9.9 19,351 17,602 9.9 Less: (a) Interest Cost & Bank Charges 152 156 (2.1) 153 (0.1) 596 531 12.3 (b) Other Un-allocable Expenses 220 151 45.9 122 80.3 763 (2) na PBT 5,016 4,734 6.0 4,629 8.4 17,993 17,074 5.4 Capital Employed Consumer Care Business 25,761 23,393 10.1 22,283 15.6 22,410 22,444 (0.2) Foods 4,411 3,881 13.6 3,648 20.9 3,932 3,344 17.6 Retails 282 300 (6.0) 302 (6.8) 312 288 8.5 Others 280 288 (2.8) 307 (8.9) 333 216 53.8 Total 30,733 27,862 10.3 26,541 15.8 26,987 26,292 2.6 Unallocable Capital Employed 31,120 23,772 30.9 33,943 (8.3) 29,644 31,038 (4.5) Total Capital Employed 61,853 51,633 19.8 60,484 2.3 56,631 57,331 (1.2) Consumer Care Business 18,847 17,767 6.1 18,446 2.2 71,329 64,141 11.2 Source: Company, HDFC sec Inst Research EBIT Margin Year to March (Rsmn) 2QFY20 2QFY19 YoY (bps) 1QFY20 QoQ (bps) FY19 FY18 YoY (bps) Consumer Care Business 26.6 25.5 110 23.5 306 24.5 24.9 (38) Foods 13.7 16.8 (307) 14.9 (116) 15.1 14.4 74 Retails (0.5) 2.2 (274) 2.0 (259) 3.3 2.7 56 Others 6.8 9.7 (287) 7.1 (26) 8.2 2.9 528 Total 24.4 23.7 64 21.6 279 22.7 22.7 (4) Source: Company, HDFC sec Inst Research

Dabur’s growth was impacted owing to muted growth in international business and declined in beverages Consumer care biz margins expanded owing to richer mix, benign commodity inflation and healthy volume growth

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Revenue Contribution (2QFY20) Revenue Contribution (FY19)

Source: Company, HDFC sec Inst Research Source: Company, HDFC sec Inst Research Revenue growth Domestic Value and Volume Growth Trajectory



International performance has recovered from the pain in FY18. Co remains committed to deliver mid-high single digit growth We believe Dabur’s domestic volume growth trajectory has bottomed out in 2QFY20

Domestic69.2International

27.4

Others2.6

(%)

Domestic70.2

International27.4

Others2.3

(%)

1 2

(7)

1

(5)

10

18

10

24

9

15

6

11

54 5

(5)

2

(4)

7

13

8

21

812

4

10

5

-10.0

-1.0

8.0

17.0

26.0

1QFY

17

2QFY

17

3QFY

17

4QFY

17

1QFY

18

2QFY

18

3QFY

18

4QFY

18

1QFY

19

2QFY

19

3QFY

19

4QFY

19

1QFY

20

2QFY

20

Value growth Volume growth (%)

1 2

(7)

1

(5)

11

18

10

24

9

15

6 11

5 6

0(6)

(20) (15)(11)

(6)

11 12 9

3 2 6

2

(20)

(8)

4

16

28

1QFY

17

2QFY

17

3QFY

17

4QFY

17

1QFY

18

2QFY

18

3QFY

18

4QFY

18

1QFY

19

2QFY

19

3QFY

19

4QFY

19

1QFY

20

2QFY

20

Domestic International(%)

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Domestic Revenue Mix (FY18) Domestic Revenue Mix (FY19)

Source: Company, HDFC sec Inst Research Source: Company, HDFC sec Inst Research

Dabur’s oral portfolio continues to gain scale despite underperformance from Babool Health supplements growth has recovered owing to decline in competitive intensity from Patanjali

Hair Care21

Health Supplement

17

Foods18

Oral Care17

OTC & Ethicals

9

Home Care7

Skin Care5

Digestives6

(%)

Hair Care22

Health Supplement

19

Foods16

Oral Care16

OTC & Ethicals

9

Home Care7

Skin Care5

Digestives6 (%)

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Domestic Category Growth (YoY)

Categories YoY Growth Wt. Avg.

4QFY17 1QFY18 2QFY18 3QFY18 4QFY18 1QFY19 2QFY19 3QFY19 4QFY19 1QFY20 2QFY20 FY17 FY18 FY19 Hair Care -4% -11% 2% 17% 9% 19% 11% 24% 3% 12% 3% -6% 4% 14% Oral Care 9% 2% 23% 23% 11% 17% 4% 10% 8% 11% 4% 4% 15% 10% Foods 10% -8% 12% 0% 2% 27% 2% 12% -7% 2% -5% 18% 1% 8% Health Supplements 5% -7% 3% 20% 14% 28% 12% 14% 10% 20% 14% -5% 10% 16% Home Care -7% 6% 10% 36% 0% 17% 11% 9% 16% 11% 7% 6% 14% 13% OTC & Ethicals -4% -7% 6% 9% 9% 13% 10% 18% 15% 14% 4% -8% 5% 14% Digestives 5% 4% 12% 19% 7% 22% 11% 23% 12% 18% 10% -8% 10% 17% Skin Care 0% 4% 16% 15% 9% 27% 12% 19% 11% 12% 1% -2% 11% 17% Source: Company, HDFC sec Inst Research

Health supplements has driven overall growth in 1HFY20 Continued market share gains in Toothpaste is heartening Juice portfolio is the key pain point for Dabur Hair oil category growth has moderated amidst weak consumer sentiments. Dabur continues to gain market share

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Assumptions Particulars FY18 FY19 FY20E FY21E FY22E Domestic Gr. (%) 5.2 11.2 8.7 12.3 13.2 Hair Care Gr. (%) 4.2 13.8 9.8 12.5 10.0 Oral Care Gr. (%) 16.9 9.7 0.8 12.5 12.0 Health Supplements Gr. (%) 10.3 14.8 12.7 14.0 16.0 OTC & Ethicals Gr. (%) 5.2 14.1 9.8 14.7 15.5 Digestive Gr. (%) 10.4 16.6 9.7 14.2 15.5 Home Care Gr. (%) 14.2 13.0 10.4 14.3 15.0 Skin Care Gr. (%) 11.1 17.4 5.9 14.9 15.0 Foods Gr. (%) 1.5 9.4 (4.4) 9.9 12.0 International Gr. (%) (6.3) 6.6 5.4 12.0 11.0 Consolidated Revenue Gr. (%) 6.9 10.5 8.7 12.3 12.7 Gross Margin (%) 50.5 49.5 50.6 51.1 51.3 ASP (% of sales) 7.9 7.1 7.1 7.0 6.9 Distribution (% of sales) 2.5 2.6 2.6 2.6 2.6 Employee (% of sales) 10.3 11.0 10.6 10.4 10.0 Other Expenses (% of sales) 9.0 8.4 8.7 8.2 8.0 EBITDA Margin (%) 20.9 20.4 21.6 22.9 23.8 Tax Rate (%) 19.8 16.2 18.0 18.0 20.0 Source: HDFC sec Inst Research Change in Estimate

FY20E FY21E FY22E

New Old Change New Old Change New Old Change Net Revenue 92,732 93,409 -0.7% 104,140 102,601 1.5% 117,369 114,843 2.2% EBITDA 20,408 20,241 0.8% 23,802 23,267 2.3% 27,992 27,045 3.5% EBITDA (adj) 20,028 19,873 0.8% 23,802 23,267 2.3% 27,992 27,045 3.5% APAT 16,568 16,852 -1.7% 20,577 20,138 2.2% 24,032 23,156 3.8% Source: HDFC sec Inst Research

We raise estimates by 2-3% to factor acceleration in volume growth in FY21E and FY22E. Our confidence is driven by outperformance of Dabur during a challenging environment. Initiatives by new management have begun to materialize.

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Peer Set Comparison

Company MCap

(Rs bn)

CMP (Rs) Reco. TP

(Rs)

EPS (Rs) P/E (x) EV/EBITDA (x) Core RoCE (%)

FY19 FY20E FY21E FY19 FY20E FY21E FY19 FY20E FY21E FY19 FY20E FY21E

HUL 4,628 2,172 NEU 2,017 28.1 34.3 42.2 77.2 63.3 51.5 52.1 47.1 36.3 248.6 38.7 28.0 ITC 2,960 263 BUY 368 10.4 12.9 14.0 25.2 20.3 18.8 16.0 14.5 13.0 39.2 46.3 49.1 Nestle 1,413 14,650 NR 13,640 167.1 233.6 278.1 87.7 62.7 52.7 50.8 43.6 37.3 82.1 114.7 137.3 Dabur 851 481 BUY 511 8.2 9.4 11.6 58.6 51.2 41.2 47.2 40.1 34.1 50.1 54.8 61.5 Britannia 776 3,231 BUY 3,594 48.1 58.6 71.9 67.2 55.1 44.9 44.0 39.8 32.5 39.2 43.1 49.8 Marico 472 366 NEU 391 7.2 8.7 10.3 50.8 42.0 35.7 36.7 29.6 26.0 48.8 47.5 52.9 Colgate 413 1,519 NEU 1,400 27.6 32.3 37.2 55.1 47.1 40.8 33.1 30.7 26.9 67.2 74.4 83.3 Emami 152 326 BUY 468 11.0 13.0 14.7 29.6 25.2 22.2 20.0 17.6 15.4 21.5 26.5 32.0 Jub. Food 209 1,583 BUY 2,134 24.1 33.2 42.1 65.7 47.7 37.6 33.7 29.7 23.1 45.8 35.5 25.8 United Spirits 456 627 BUY 737 10.2 12.6 16.4 61.3 49.8 38.3 35.4 29.1 24.6 15.8 18.4 21.6 Radico Khaitan 44 328 BUY 496 14.1 17.8 21.5 23.2 18.4 15.3 13.4 11.9 10.0 11.5 13.8 15.3 Source: HDFC sec Inst Research

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Income Statement (Rsmn) FY18 FY19 FY20E FY21E FY22E Net Revenues 77,219 85,331 92,732 104,140 117,369 Growth (%) 6.9 10.5 8.7 12.3 12.7 Material Expenses 38,199 43,090 45,823 50,966 57,176 Employee Expense 7,928 9,379 9,834 10,790 11,761 A&P Expense 6,067 6,083 6,613 7,311 8,043 Distribution Expense 1,914 2,201 2,391 2,686 3,027 Other Expenses 6,936 7,182 7,662 8,585 9,371 EBITDA 16,174 17,396 20,408 23,802 27,992 EBITDA Growth (%) 7.2 7.6 17.3 16.6 17.6 EBITDA Margin (%) 20.9 20.4 22.0 22.9 23.8 Adj EBITDA 16,174 17,396 20,028 23,802 27,992 Adj EBITDA Growth (%) 7.2 7.6 15.1 18.8 17.6 Adj EBITDA Margin (%) 20.9 20.4 21.6 22.9 23.8 Depreciation 1,622 1,769 2,261 2,412 2,562 EBIT 14,552 15,627 18,147 21,390 25,430 Other Income (Including EO Items) 3,052 2,962 3,287 4,187 4,979

Interest 531 596 583 432 316 PBT 16,928 17,239 20,251 25,145 30,093 Total Tax 3,354 2,786 3,646 4,526 6,019 Adjusted PAT 13,663 14,436 16,568 20,577 24,032 APAT Growth (%) 7.0 5.7 14.8 24.2 16.8 Adjusted EPS (Rs) 7.8 8.2 9.4 11.6 13.6 EPS Growth (%) 7.0 5.7 14.4 24.2 16.8


Balance Sheet (Rsmn) FY18 FY19 FY20E FY21E FY22E SOURCES OF FUNDS Share Capital - Equity 1,762 1,762 1,767 1,767 1,767 Reserves 55,304 56,467 64,541 74,467 83,587 Total Shareholders Funds 57,065 58,229 66,308 76,234 85,354 Minority Interest 265 314 277 235 192 Long Term Debt 3,686 306 206 106 6 Short Term Debt 5,766 5,266 4,466 2,966 1,466 Total Debt 9,452 5,572 4,672 3,072 1,472 Net Deferred Taxes 1,091 1,091 1,091 1,091 1,091 Other Non-current Liabilities &Provns 565 595 655 720 792

TOTAL SOURCES OF FUNDS 68,438 65,801 73,003 81,352 88,901 APPLICATION OF FUNDS Net Block 20,281 20,219 20,957 21,046 20,983 CWIP 522 756 767 780 795 Other Non Current Assets 490 954 1,049 1,154 1,270 Total Non-current Assets 21,293 21,929 22,774 22,980 23,048 Inventories 12,562 13,005 13,836 15,338 17,121 Debtors 7,061 8,336 9,059 10,173 11,465 Other Current Assets 4,988 6,122 6,549 7,009 7,503 Cash & Equivalents 41,112 38,029 43,723 50,914 57,219 Total Current Assets 65,723 65,492 73,167 83,434 93,308 Creditors 17,094 19,811 21,022 23,037 25,320 Other Current Liabilities & Provns 1,484 1,809 1,917 2,026 2,134 Total Current Liabilities 18,578 21,620 22,939 25,063 27,455 Net Current Assets 47,145 43,872 50,229 58,371 65,853 TOTAL APPLICATION OF FUNDS 68,438 65,801 73,003 81,352 88,901


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Cash Flow Statement (Rsmn) FY18 FY19 FY20E FY21E FY22E Reported PBT 16,931 17,239 20,251 25,145 30,093 Non-operating & EO Items (2,262) 49 (37) (42) (42) Interest Expenses 424 596 583 432 316 Depreciation 1,622 1,769 2,261 2,412 2,562 Working Capital Change (2,575) (255) (710) (1,004) (1,235) Tax Paid (3,249) (2,786) (3,646) (4,526) (6,019) OPERATING CASH FLOW ( a ) 10,890 16,611 18,702 22,417 25,675 Capex (2,003) (1,929) (3,000) (2,500) (2,500) Free Cash Flow (FCF) 8,887 14,682 15,702 19,917 23,175 Investments (5,837) 4,464 (2,500) (2,500) (2,500) Non-operating Income 2,437 - - - - INVESTING CASH FLOW ( b ) (5,402) 2,535 (5,500) (5,000) (5,000) Debt Issuance/(Repaid) (545) (3,880) (900) (1,600) (1,600) Interest Expenses (428) (596) (583) (432) (316) FCFE 6,461 23,622 14,685 19,450 22,591 Share Capital Issuance - 0 6 (0) 0 Dividend (4,770) (13,273) (8,494) (10,651) (14,912) Others - - - - - FINANCING CASH FLOW ( c ) (5,744) (17,748) (9,972) (12,683) (16,828) NET CASH FLOW (a+b+c) (256) 1,398 3,230 4,734 3,847 EO Items, Others 269 (17) - - - Closing Cash & Equivalents 3,061 4,442 7,636 12,327 16,131


Key Ratios FY18 FY19 FY20E FY21E FY22E PROFITABILITY (%) GPM 50.5 49.5 50.6 51.1 51.3 EBITDA Margin 20.9 20.4 22.0 22.9 23.8 EBIT Margin 18.8 18.3 19.6 20.5 21.7 APAT Margin 17.7 16.9 17.9 19.8 20.5 RoE 25.9 25.0 26.6 28.9 29.7 RoIC (or Core RoCE) 47.3 50.1 54.8 61.5 68.4 RoCE 22.4 22.7 25.1 27.6 29.0 EFFICIENCY Tax Rate (%) 19.8 16.2 18.0 18.0 20.0 Fixed Asset Turnover (x) 2.5 2.7 2.6 2.8 2.9 Inventory (days) 59.4 55.6 54.5 53.8 53.2 Debtors (days) 33.4 35.7 35.7 35.7 35.7 Other Current Assets (days) 23.6 26.2 25.8 24.6 23.3 Payables (days) 80.8 84.7 82.7 80.7 78.7 Other Current Liab&Provns (days) 7.0 7.7 7.5 7.1 6.6 Cash Conversion Cycle (days) 28.5 25.0 25.6 26.1 26.9 Net D/E (x) (0.6) (0.6) (0.6) (0.6) (0.7) Interest Coverage (x) 27.4 26.2 31.1 49.5 80.4 PER SHARE DATA (Rs) EPS 7.8 8.2 9.4 11.6 13.6 CEPS 8.7 9.2 10.7 13.0 15.1 Dividend 6.3 4.0 5.0 7.0 9.0 Book Value 32.4 33.1 37.5 43.1 48.3 VALUATION P/E (x) 61.9 58.6 51.2 41.2 35.3 P/BV (x) 14.8 14.5 12.8 11.1 9.9 EV/EBITDA (x) 50.8 47.2 40.1 34.1 28.8 EV/Revenues (x) 10.6 9.6 8.9 7.8 6.9 OCF/EV (%) 1.3 2.0 2.3 2.8 3.2 FCF/EV (%) 1.1 1.8 1.9 2.5 2.9 FCFE/Mkt Cap (%) 0.8 2.8 1.7 2.3 2.7 Dividend Yield (%) 1.3 0.8 1.0 1.5 1.9


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RECOMMENDATION HISTORY

Rating Definitions BUY : Where the stock is expected to deliver more than 10% returns over the next 12 month period NEUTRAL : Where the stock is expected to deliver (-)10% to 10% returns over the next 12 month period SELL : Where the stock is expected to deliver less than (-)10% returns over the next 12 month period

Date CMP Reco Target 9-Jan-19 416 BUY 477 2-Feb-19 452 BUY 482

10-Apr-19 404 BUY 485 3-May-19 382 BUY 464 9-Jul-19 406 BUY 457

22-Jul-19 420 BUY 470 11-Sep-19 444 BUY 491 22-Sep-19 446 BUY 497 11-Oct-19 439 BUY 490 5-Nov-19 481 BUY 511

350370390410430450470490510530550

Nov-

18

Dec-

18

Jan-

19

Feb-

19

Mar

-19

Apr-

19

May

-19

Jun-

19

Jul-1

9

Aug-

19

Sep -

19

Oct

-19

Nov-

19

Dabur TP

HDFC securities Institutional Equities Unit No. 1602, 16th Floor, Tower A, Peninsula Business Park, Senapati Bapat Marg, Lower Parel,Mumbai - 400 013 Board : +91-22-6171 7330 www.hdfcsec.com

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Disclosure: We, Naveen Trivedi, MBA & Siddhant Chhabria, PGDBM, authors and the names subscribed to this report, hereby certify that all of the views expressed in this research report accurately reflect our views about the subject issuer(s) or securities. HSL has no material adverse disciplinary history as on the date of publication of this report. We also certify that no part of our compensation was, is, or will be directly or indirectly related to the specific recommendation(s) or view(s) in this report. Research Analyst or his/her relative or HDFC Securities Ltd. does not have any financial interest in the subject company. Also Research Analyst or his relative or HDFC Securities Ltd. or its Associate may have beneficial ownership of 1% or more in the subject company at the end of the month immediately preceding the date of publication of the Research Report. Further Research Analyst or his relative or HDFC Securities Ltd. or its associate does not have any material conflict of interest. Any holding in stock –No HDFC Securities Limited (HSL) is a SEBI Registered Research Analyst having registration no. INH000002475. Disclaimer: This report has been prepared by HDFC Securities Ltd and is solely for information of the recipient only. The report must not be used as a singular basis of any investment decision. The views herein are of a general nature and do not consider the risk appetite or the particular circumstances of an individual investor; readers are requested to take professional advice before investing. Nothing in this document should be construed as investment advice. Each recipient of this document should make such investigations as they deem necessary to arrive at an independent evaluation of an investment in securities of the companies referred to in this document (including merits and risks) and should consult their own advisors to determine merits and risks of such investment. The information and opinions contained herein have been compiled or arrived at, based upon information obtained in good faith from sources believed to be reliable. Such information has not been independently verified and no guaranty, representation of warranty, express or implied, is made as to its accuracy, completeness or correctness. All such information and opinions are subject to change without notice. Descriptions of any company or companies or their securities mentioned herein are not intended to be complete. HSL is not obliged to update this report for such changes. HSL has the right to make changes and modifications at any time. 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HSL, its directors, analysts or employees do not take any responsibility, financial or otherwise, of the losses or the damages sustained due to the investments made or any action taken on basis of this report, including but not restricted to, fluctuation in the prices of shares and bonds, changes in the currency rates, diminution in the NAVs, reduction in the dividend or income, etc. HSL and other group companies, its directors, associates, employees may have various positions in any of the stocks, securities and financial instruments dealt in the report, or may make sell or purchase or other deals in these securities from time to time or may deal in other securities of the companies / organizations described in this report. HSL or its associates might have managed or co-managed public offering of securities for the subject company or might have been mandated by the subject company for any other assignment in the past twelve months. HSL or its associates might have received any compensation from the companies mentioned in the report during the period preceding twelve months from t date of this report for services in respect of managing or co-managing public offerings, corporate finance, investment banking or merchant banking, brokerage services or other advisory service in a merger or specific transaction in the normal course of business. HSL or its analysts did not receive any compensation or other benefits from the companies mentioned in the report or third party in connection with preparation of the research report. Accordingly, neither HSL nor Research Analysts have any material conflict of interest at the time of publication of this report. Compensation of our Research Analysts is not based on any specific merchant banking, investment banking or brokerage service transactions. HSL may have issued other reports that are inconsistent with and reach different conclusion from the information presented in this report. Research entity has not been engaged in market making activity for the subject company. Research analyst has not served as an officer, director or employee of the subject company. We have not received any compensation/benefits from the subject company or third party in connection with the Research Report. HDFC securities Limited, I Think Techno Campus, Building - B, "Alpha", Office Floor 8, Near Kanjurmarg Station, Opp. Crompton Greaves, Kanjurmarg (East), Mumbai 400 042 Phone: (022) 3075 3400 Fax: (022) 2496 5066 Compliance Officer: Binkle R. Oza Email: [email protected] Phone: (022) 3045 3600 HDFC Securities Limited, SEBI Reg. No.: NSE, BSE, MSEI, MCX: INZ000186937; AMFI Reg. No. ARN: 13549; PFRDA Reg. No. POP: 11092018; IRDA Corporate Agent License No.: HDF 2806925/HDF C000222657; SEBI Research Analyst Reg. 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