Stock Market Result Update on Dabur India for 2QFY2012

Stock Market Result Update on Dabur India for 2QFY2012 with an Accumulate recommendation and a Target Price of `115 (12 months).

Dabur reported an impressive performance for 2QFY2012. Top-line growth was strong at 30% yoy, marginally above our estimates, driven by a mix of volume and value growth and recent acquisitions. Earnings grew by 8.4% yoy, in-line with our estimates. We maintain our Accumulate recommendation on the stock.

Key highlights for the quarter: During the quarter, Dabur merged its consumer healthcare division with the consumer care division to synergize distribution. Dabur Lanka Pvt. Ltd., the wholly owned subsidiary of Dabur International Ltd., was incorporated for setting up the new fruit juice facility near Colombo (the company has plans to invest `70cr over two years). In terms of organic growth, the domestic business grew by 11% yoy and the international business excluding the recent acquisitions grew by 22.8% yoy. 

Outlook and valuation: Post 2QFY2012 results, we maintain our revenue and earnings estimates. We expect the company to grow at a ~20% CAGR over FY2011–13E, backed by its recent acquisitions. We have modeled in flat OPM for FY2012E and FY2013E due to sustained gross margin pressure and upon higher ad spends because of a stronger competitive environment. At the CMP, the stock is trading at 22x FY2013E EPS. We maintain our Accumulate rating on the stock with a target price of `115.