Q4FY20 - Result Update

29th May 2020 Dabur India Ltd

Weak Performance amidst Covid related lockdown

CMP: Rs 448 Dabur India Q4FY20 earnings were below our projections with a miss in
Revenue, EBITDA and PAT front. The company has reported a lower net
Rating: HOLD profit at Rs 281 crore for the quarter under review as compared to Rs
370 crore for the same quarter in the previous year, impacted on
Target Price: Rs 492 account of lockdown during the second half of March 2020. Net sales
dropped by 12.3% at Rs 1,865 crore for Q4 FY20 as compared to Rs 2,128
Stock Info cr for the Q4FY19, EBITDA declined 23% YoY to Rs 352 crore for the
BSE 500096 Q4FY20 from Rs 457 crore for the Q3FY19 and EBITDA margin
NSE DABUR contracted 260 bps to 18.9%.The company recommended a final
dividend of Rs 1.60 per share for the financial year 2019-20.
Bloomberg DABUR IN
Reuters DABUR.NS Q4FY20 Highlights
Sector Personal care • Healthcare portfolio Fully was witnessing a strong 11.4% viability
Face Value (Rs) 1 February2020 growth driven by topical marketing campaigns, localised
sales activation and sustained investment in the power plant.
Equity Capital (Rs Cr) 177
• Q4FY20 consolidated revenue from operations reported a decline of
Mkt Cap (Rs cr) 75,993 12.3% in the FMCG business or volume decline of 14.6%. These
52w H/L (Rs) 525/ 377 numbers for the first two months of the quarter that is Jan & Feb were
Avg Yearly Vol (in 000’) 2331 trending at 4.5% growth for consolidated revenue and 4.6% for FMCG
India volume growth.
Shareholding Pattern % • International businesses were flat during the last quarter of FY20.
(As on March, 2020) • Turkey business witness growth of almost 50% in Q4 and Egypt
recorded growth of 14.3%
Promoters 67.86
• Namaste business growth of 11.3% and Sub Saharan Africa for growth
Public & Others 32.14 of 17% during Q4FY20.
• MENA business was doing well during the year but impacted due to
COVID and economic slowdown reporting a decline of 7.7% during the
Stock Performance (%) 3m 6m 12m quarter.
Dabur -15.0 -6.3 7.5

Nifty -21.7 -24.4 -23.6 Valuations

At CMP of 448, Dabur India is trading at a P/E of 52.8x and 45.5x its FY
21E and FY22E earnings respectively. We have lowered our revenue
Marico Vs Nifty estimates owing to factor in the impact of disruption caused by outbreak
of COVID-19. Management has introduced many initiatives such as
150 growing the Healthcare segment, the power brand strategy and new
launches. Dabur business remains on a strong footing and Management
130
is confident of achieving strong growth pre-Covid time once things
110
normalise. Company expects rural growth to be ahead of urban in the
90 near future. We value Dabur at PE of 50x to its FY22E EPS of Rs 9.8, which
70 yields a TP of Rs 492. We maintain our recommendation to Hold.
50
Jun-19

Nov-19
Dec-19
Jul-19

Oct-19
Sep-19

Feb-20

Apr-20
May-19

Aug-19

Mar-20
Jan-20

Financial Performance

YE March EBITDA
Dabur Nifty 50 Net Sales EBITDA PAT EPS (Rs) RoE (%) P/E (x)
(RsCr) Margin %
FY19 8,533 1,740 1,446 8.2 20.4% 25.7% 54.7
FY20 8,704 1,792 1,448 8.2 20.6% 21.9% 54.7
Jyoti Singh FY21E 8,837 1,783 1,500 8.5 20.2% 18.9% 52.8
[email protected] FY22E 9,592 2,086 1,739 9.8 21.7% 18.9% 45.5
022 67114834
Source: Arihant Research, Company Filings, Ace Equity, Bloomberg

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1011, Solitaire Corporate Park, Bldg No.10, 1st Floor, Andheri Ghatkopar Link Rd, Chakala, Andheri (E), Mumbai 400093
Q4FY20 - Result Update| Marico Ltd.

Q4FY20 Financial Performance

Rs Cr (consolidated) Q4FY20 Q4FY19 Q3FY20 Q-o-Q Y-o-Y

Net Revenue 1,865 2,128 2,353 -20.7% -12.3%
Material Cost 950 1,069 1,174 -19.1% -11.2%
Employee cost 230 242 245 -6.0% -4.9%
Other Expenses 333 360 441 0.0% -7.3%
EBITDA 352 457 493 -28.5% -23.0%
EBITDA margin % 18.9% 21.5% 20.9% -206bps -260bps
Other Income 76 66 74 1.8% 14.7%
Depreciation 59 46 54 8.1% 27.3%
EBIT 369 477 513 -28.0% -22.6%
Finance cost 9 12 10 -18.4% -31.0%
Exceptional Item -20 -75 -20 - -
PBT 341 389 482 -29.4% -12.5%
Tax Expense 59 18 83 -29.7% 229.9%
Effective tax rate % 17.2% 4.6% 17.3% -8bps 1265bps
PAT 282 372 399 -29.3% -24.1%
MI & Associates -1 -1 -1
Consolidated PAT 281 370 398 -29.3% -24.1%
PAT margin % 15.1% 17.4% 16.9% -183bps -233bps
EPS (Rs) 1.6 2.3 2.3 -29.4% -29.3%
Source: Arihant Research, Company Filings, Ace Equity, Bloomberg

Conference Call Highlights

Company Strategy: Dabur India materially impacted in march, on account of lockdown. A lot of downs in
March, also overlap for the pre-season sales of all summer season brand like Juices Glucose Pudin Hara, Hair
oils and ethical portfolio. Company plans to focus on E-commerce and establish platform for direct to
consumer delivery. It also partnering up with Dunzo and Swiggy.
Healthcare portfolio: Health supplements grew by 12.9% in February 2020 led by robust growth of
Chyawanprash and Glucose. Inventory levels are low due to high demand for products like Chyawanprash.
Many products of Healthcare range were earlier not part of essentials but Govt later included into essentials.
Thereby, healthcare range can do well in the coming qtrs. Ethicals portfolio grew by 9.3% in 4QFY20.
HPC (Home and Personal Care): Toothpaste market share grew 40bps, and the gain in market share was
across the brands. Co also witnessed sequential increase in market share in each month in 4QFY20. Hair oil
reported a mixed single digit growth on account of continued slowdown in the category Brahmi Amla and
Sarson Amla Hair Oil posted double digit YTD February growth, market shares of hair oil increased by 60 basis
points. Hygiene products have gained salience. Co has launched a new brand “Sanitize” under which it has
launched Hand Sanitizer and plans to launch multiple hygiene products.
Foods: Food witness a flat YTD February growth is mainly on account of a sharp slowdown overall juice
category and downgrading to cheaper alternative by the consumers. Launched Juice alternatives with
reduced sugar content. Launched Pink Guava, Masala Sugarcane and Coconut Water . Juices market (Rs 16bn)
saw 7.6% decline in FY20, Dabur gained 300bps market share. However, Company has entered Drinks
category (Rs 75bn) which is growing. In Jan and Feb, Company saw strong growth of 10% in Coolerz.
Margin: Volume growth is compensating for reduction in absolute gross margins due to aggressive
promotions. Don’t expect inflationary pressure going forward. Could see minor improvement over the next
year - Overall operating margin saw an improvement, increasing by 157bps.
Outlook: Dabur business remains on a strong footing and Management is confident of achieving strong
growth of pre-Covid time once things normalise. Company expects rural growth to be ahead of urban in the
near future.

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 Q4FY20 - Result Update| Marico Ltd.

Income Statement (Rs Cr) Balance Sheet (Rs Cr)

Year End-March FY19 FY20 FY21E FY22E
Year End-March FY19 FY20 FY21E FY22E
Sources of Funds
Revenues 8,533 8,704 8,837 9,592
Share Capital 177 177 177 177
Change (%) 10.5% 2.0% 1.5% 8.5% Reserves & Surplus 5,455 6,429 7,741 9,047
Raw materials 4,309 4,360 4,495 4,863 Net Worth 5,632 6,606 7,918 9,223
Loan Funds 524 467 792 922
Gross Profit 4,224 4,343 4,342 4,729
MI, Deferred Tax & other
Employee costs 938 948 979 986 liabilities 59 59 58 58
Other expenses 1,547 1,603 1,580 1,658 Capital Employed 6,215 7,131 8,768 10,203
Total Expenses 6,793 6,911 7,054 7,507 Application of Funds
Gross Block 2,828 3,332 3,731 4,130
EBITDA 1,740 1,792 1,783 2,086
Less: Depreciation 1,195 1,415 1,637 1,875
Other Income 296 305 300 300 Net Block 1,600 1,917 2,094 2,255
Depreciation 177 220 222 238 CWIP 64 147 147 147
Other non current assets 502 954 954 954
Interest 60 50 73 73
Current tax assets 2 2 2 2
PBT 1,799 1,828 1,789 2,075 Net fixed assets 2,168 3,019 3,196 3,357
Extra-ordinary 75 100 0 0 Investments 3,392 2,844 2,844 2,844
PBT after ext-ord. 1,724 1,728 1,789 2,075 Debtors 834 814 968 1,077
Inventories 1,301 1,380 1,404 1,524
Tax 279 280 290 336 Cash & bank balance 328 811 1,707 2,763
Rate (%) 16.2% 16.2% 16.2% 16.2% Loans & advances & other
PAT 1,445 1,448 1,500 1,739 CA 415 508 809 865
Total current assets 2,877 3,491 5,207 6,647
Share of profit/(loss) of associates
for the year 1 0 0 0 Current liabilities 2,032 1,994 2,252 2,418
Provisions 190 228 228 228
Consolidated PAT 1,446 1,448 1,500 1,739 Net current assets 655 1,268 2,727 4,001
Change (%) 6.8% 0.1% 3.6% 16.0% Total Assets 6,215 7,131 8,768 10,203

Cash Flow Statement (Rs Cr) Key Ratios

Year End-March FY19 FY20 FY21E FY22E
Year End-March FY19 FY20 FY21E FY22E
Per share (Rs)
PBT 1,799 1,828 1,789 2,075
EPS 8.2 8.2 8.5 9.8
Depreciation 177 220 222 238 CEPS 9.2 9.4 9.7 11.2
Interest & others -236 -256 -228 -228 BVPS 31.9 37.4 44.8 52.2
Cash flow before WC changes 1,741 1,792 1,783 2,086 DPS 2.0 1.6 2.1 2.5
Payout (%) 24.2% 19.5% 25.0% 25.0%
(Inc)/dec in working capital -8 -157 -223 -118
Valuation (x)
Operating CF after WC changes 1,732 1,635 1,560 1,968
P/E 54.7 54.7 52.8 45.5
Less: Taxes -279 -280 -290 -336 P/CEPS 48.8 47.5 46.0 40.0
Operating cash flow 1,454 1,355 1,271 1,632 P/BV 14.1 12.0 10.0 8.6
(Inc)/dec in F.A + CWIP -28 -482 -399 -399 EV/EBITDA 49.0 47.2 47.2 39.9
Dividend Yield (%) 0.4% 0.4% 0.5% 0.5%
(Pur)/sale of investment 410 96 0 0
Return ratio (%)
Cash flow from investing 382 -386 -399 -399
EBIDTA Margin 20.4% 20.6% 20.2% 21.7%
Free cash flow (FCF) 1,426 873 872 1,233 PAT Margin 16.9% 16.6% 17.0% 18.1%
Loan raised/(repaid) -305 -57 325 131 ROE 25.7% 21.9% 18.9% 18.9%
Equity raised 0 0 0 0 ROCE 25.1% 22.0% 17.8% 18.1%
Leverage Ratio (%)
Interest & others -1,088 -1,120 -1,238 -1,178
Total D/E 0.2 0.1 0.1 0.1
Dividend -351 -283 -375 -435
Net D/E 0.0 -0.1 -0.1 -0.2
Cash flow from financing
Turnover Ratios
activities -1,814 -486 24 -177
Asset Turnover (x) 1.4 1.2 1.0 0.9
Net inc /(dec) in cash 22 482 896 1,056
Inventory Days 56 58 58 58
Opening balance of cash 306 328 811 1,707 Receivable Days 36 34 40 41
Closing balance of cash 328 811 1,707 2,763 Payable days 95 93 93 92
Source: Arihant Research, Company Filings, Ace Equity, Bloomberg

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Q4FY20 - Result Update| Marico Ltd.

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