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Dabur: Encouraging numbers… - Views on News from Equitymaster
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  • Jul 31, 2002

    Dabur: Encouraging numbers…

    Dabur India, the ayurvedic products major, has reported an encouraging 7% topline growth in June quarter. It ability to control costs led to a 100 basis point expansion in operating margins, thus helping the company report an over 30% growth in 1QFY03.

    (Rs m) 1QFY02 1QFY03 Change
    Net Sales 2,489 2,661 6.9%
    Other Income 16 21 30.6%
    Expenditure 2,304 2,438 5.8%
    Operating Profit (EBDIT) 185 223 20.6%
    Operating Profit Margin (%) 7.4% 8.4%  
    Interest 53 57 8.3%
    Depreciation 53 53 -0.6%
    Profit before Tax 95 134 40.8%
    Tax 7 19 163.0%
    Profit after Tax 88 115 30.7%
    Net profit margin (%) 3.5% 4.3%  
    Effective tax rate (%) 7.7% 14.3%  
    No. of Shares (eoy) (m) 285.2 285.2  
    Diluted earnings per share 1.2 1.6  
    P/E ratio   28.9  

    The company's interest and depreciation heads remained more or less steady at last year's levels. However, deferred taxes led to higher tax provisioning. Profit before tax growth stood at nearly 41% during the quarter.

    Cost break-up
    (Rs m) 1QFY02 1QFY03 Change
    Raw material 525 469 -10.7%
    Staff cost 176 195 10.5%
    Finished goods purchased 651 716 9.9%
    Advertising & publicity 333 337 1.2%
    Others 619 722 16.6%
    Total Expenditure 2,304 2,438 5.8%

    Though Dabur's raw matrial costs declined nearly 11%, its purchases of finished goods went up by nearly 10% YoY. This reflects the increasing trend of outsourcing adopted by the company. A lot of FMCG companies outsource production finding them more cost efficient as compared to own plant manufacture.

    The stock trades at Rs 47, a P/E of 29x annualised 1QFY03 earnings. Though the company's June quarter performance is encouraging, Dabur has a knack of inconsistent performances. The valuations anyway seem to have factored in a decent growth during FY03.



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