Dabur

Please refer to important disclosures at the end of this report 1

(Rs cr) 1QFY11 1QFY10 % yoy Angel Est % Diff

Revenue 916.5 742.7 23.4 864.9 6.0

EBITDA 136.7 118.2 15.6 144.9 (5.6)

OPM (%) 14.9 15.9 (100bp) 16.8 (183bp)

PAT 106.8 91.4 16.9 115.4 (7.5)

Source: Company, Angel Research Dabur reported a mixed set of numbers for 1QFY2011. While top-line growth was strong at 23%, above estimates, driven by highest-ever 20% volume growth, earnings grew 17% yoy, below estimates, impacted by margin contraction and higher tax rate. Dabur announced acquisition of Hobi group (Turkish firm) present in personal products category at an all-cash deal of US $69mn (to be completed in 3QFY2011). It also announced a bonus issue of 1:1. We maintain Reduce on the stock. Highest-ever volume growth, earnings disappoint: Dabur posted a healthy growth in top-line by 23% yoy to Rs917cr led by volume growth of 19.5% yoy. Domestic business kicked in 17% growth (15.5% was volume). International business, in rupee terms, posted 29% yoy growth. In terms of categories, CCD recorded its highest-ever growth of 19% yoy (largely volume driven) aided by a strong 43%, 31% and 28% yoy growth in health supplements, homecare and oral care, respectively. However, shampoos witnessed a contraction of 17.1%, while Fem registered muted growth of 8% yoy. Dabur’s earnings registered 17% yoy growth to Rs917cr, lower than our estimates, due to margin contraction and higher tax rate. On the operating front, Dabur witnessed margin contraction of 100bp yoy due to higher ad spends (up 113bp yoy). Outlook and Valuation: We remain bullish on Dabur’s diversified product portfolio with a niche positioning in the herbal/natural space. However, owing to the recent run up in the stock price, at the CMP of Rs204, the stock is trading at rich valuations of 26.2x FY2012E EPS of Rs7.8 leaving little room for upside. Hence, we maintain Reduce on the stock, with a Target Price of Rs195 (based on 25x FY2012E earnings). Key Financials (Consolidated) Y/E March (Rs cr) FY2009 FY2010 FY2011E FY2012E

Net Sales 2,805 3,366 3,987 4,636

% chg 18.8 20.0 18.5 16.3

Net Profit (Adj) 390.8 504.3 569.3 679.9

% chg 17.1 29.1 12.9 19.4

EBITDA (%) 16.8 18.8 18.5 18.8

EPS (Rs) 4.5 5.8 6.5 7.8

P/E (x) 45.3 35.2 31.2 26.2

P/BV (x) 21.5 13.9 11.2 9.3

RoE (%) 54.4 48.2 39.9 39.1

RoCE (%) 47.3 45.6 42.4 43.8

EV/Sales (x) 6.3 5.2 4.4 3.7

EV/EBITDA (x) 37.5 27.6 23.5 19.6

Source: Company, Angel Research

REDUCE CMP Rs204 Target Price Rs195

Investment Period 12 Months Stock Info

Sector FMCG

Market Cap (Rs cr) 17,695

Beta 0.4

52 Week High / Low 219/119

Avg. Daily Volume 1,50,010

Face Value (Rs) 1

BSE Sensex 18,020

Nifty 5,419

Reuters Code DABU.BO

Bloomberg Code DABUR@IN

Shareholding Pattern (%)

Promoters

68.9

MF / Banks / Indian Fls

10.5

FII / NRIs / OCBs

15.3

Indian Public / Others 5.3

Abs. (%) 3m 1yr 3yr

Sensex 1.5 17.2 14.2

Dabur 15.1 56.6 94.9

Anand Shah

022-4040 3800-334

[email protected]

Chitrangda Kapur

022-4040 3800-323

[email protected]

Dabur India Performance Highlights

1QFY2011 Result Update | FMCG

July 26, 2010

Dabur|1QFY2011 Result Update

July 26, 2010 2

Exhibit 1: Quarterly Performance

Y/E March (Rs cr) 1QFY11 1QFY10 % yoy FY2010 FY2009 % chg

Net Sales 916.5 742.7 23.4 3,365.7 2,805.4 20.0

Consumption of RM 434.6 352.9 23.2 1,539.4 1,376.2 11.9

(% of Sales) 47.4 47.5

45.7 49.1

Staff Costs 72.8 59.7 22.0 280.4 234.7 19.5

(% of Sales) 7.9 8.0

8.3 8.4

Advertising 150.7 113.8 32.5 484.5 343.3 41.1

(% of Sales) 16.4 15.3

14.4 12.2

Other Expenses 121.6 98.1 24.0 428.4 380.8 12.5

(% of Sales) 13.3 13.2

12.7 13.6

Total Expenditure 779.8 624.4 24.9 2,732.7 2,335.0 17.0

Operating Profit 136.7 118.2 15.6 633.0 470.5 34.5

OPM (%) 14.9 15.9

18.8 16.8

Interest 0.8 3.7 (78.7) 13.2 23.2 (43.3)

Depreciation 14.5 12.3 17.2 55.7 49.2 13.2

Other Income 12.2 7.8 55.7 38.7 46.8 (17.3)

PBT (excl. Extr. Items) 133.7 110.1 21.5 602.8 444.8 35.5

Extr. Income/(Expense) - -

(2.0) -

PBT (incl. Extr. Items) 133.7 110.1 21.5 604.8 444.8 36.0

(% of Sales) 14.6 14.8

18.0 15.9

Provision for Taxation 26.3 19.0 38.2 100.5 54.0 85.9

(% of PBT) 19.7 17.3

16.6 12.1

PAT (Before Minority) 107.4 91.0 18.0 504.3 390.8 29.1

Minority Interest 0.6 (0.4)

0.8 (0.4)

Reported PAT 106.8 91.4 16.9 503.5 391.2 28.7

PATM (%) 11.7 12.3

15.0 13.9

Equity shares (cr) 87.0 86.3

86.8 86.5

EPS (Rs) 1.2 1.1 15.9 5.8 4.5


Highest volume growth at 20%, CCD and IBD drive top-line growth

Dabur posted a healthy growth in top-line by 23% yoy to Rs917cr (Rs743cr) on a consolidated basis led by highest-ever volume growth of 19.5% yoy. Domestic business kicked in about 17% growth, out of which around 15.5% was volume. International business, in rupee terms, posted a growth of 29% yoy (37-38% in constant currency terms, strengthening of the rupee led to lower growth). The volume growth was pretty much constant across both the international and domestic business. Dabur undertook ~5% price hike in the latter part of 1QFY2011, which is likely to reflect in ensuing quarters. In terms of categories, CCD recorded its highest-ever growth of 19% yoy (largely volume driven) aided by a strong 43% yoy growth in health supplements (Chyawanprash almost doubled), 31% yoy growth in homecare and 20% yoy growth in oral care (toothpastes grew 28% yoy). However, shampoos witnessed a contraction of 17.1% yoy due to disruptive competitive activity. Fem business registered a muted growth of 8% yoy. CHD witnessed muted growth of 10.2% yoy as sales this quarter was impacted due to supply-side issues in OTC products.


July 26, 2010 3

Exhibit 2: Strong top-line growth driven by volumes


Exhibit 3: Records highest ever overall volume growth


Earnings growth at 17% yoy, below estimates by 7.5% Dabur, on a consolidated basis, registered healthy growth in earnings of 17% yoy to Rs917cr (Rs743cr), lower than our estimates, due to margin contraction and higher tax rate (up 238bp yoy due to increase in MAT). Gross margins stable, higher ad spends lead to OPM contraction On the operating front, Dabur delivered a margin contraction of 100bp yoy to 14.9% (15.9%) resulting in modest growth of 16% yoy in EBITDA to Rs137cr (Rs118cr). While gross margins contracted 180bp at domestic level (due to timing mismatch between price hikes and input costs pressures (expected to stabilise 2QFY2011 onwards), sharp profitability improvement in international business helped Dabur sustain its consolidated gross margins. However, higher ad spends (up 113bp yoy due to product campaigns and rising competitive intensity in shampoos) led to margin contraction. Management has indicated that the company is seeing softening of prices in key commodities such as edible oils and the price increases would further increase the headroom for growth.

Exhibit 4: Earnings growth moderates


Exhibit 5: OPM contracts 100bp as ad spend rises


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PAT (LHS) YoY growth (RHS)

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20.7 19.1 19.1 14.9

50.3 51.2 49.0 53.2 52.5 55.0 54.6 54.7 52.6

13.5 11.3 11.2 13.2 15.3 14.2 14.6 13.6 16.4

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July 26, 2010 4

Exhibit 6: 1QFY2011 Category-wise growth (Consolidated) Growth (%) Comments Consumer Care Division 18.9 Largely volume led

Hair care 8.9 Dabur Amla Hair Oil grew 18.9% (in spite of higher competition) and Vatika hair oil grew 22.2% (driven by focused marketing), Anmol coconut hair oil grew 15.6%; Shampoo category declined 17.1% yoy due to disruptive competition.

Oral care 20.2 Toothpastes grew 28.1%, Dabur Red grew 31.2%, Meswak grew 14.4% and Babool grew 29.4%. Dabur Red Toothpowder grew by 2.4% driven by consumer activation and launch of Re0.5 SKU.

Health supplements 42.8 Glucose grew its strongest at 53.6% and Honey grew 17.7% (driven by new SKU). Chyawanprash grew whopping 94% led by campaign for building immunity.

Digestives 14.7 Hajmola tablets grew 17.7% and Hajmola candies grew 8.1%. For Hajmola, new variants and innovative consumer activations have been key drivers. Lal Tail has grown at 14.2% driven by aggressive marketing.

Skin care 12.4 The Gulabari portfolio grew 22.9%, driven by consumer activations. Fem portfolio grew by 8% with growth in Fem bleaches at 14%.

Home care 31.5 Odomos grew 8.5%, Odonil grew 68.4% post re-launch and Sanifresh reported 33.6% growth. New launches – Odonil Pluggy and Odomos Oil

Foods division 21.2 Crossed Rs100cr mark for a quarter driven by new Fruit Power campaign and improved on ground visibility, Real Juices grew 21%, Real Activ grew at 35%, Hommade registered a strong growth of 37.2%.

Consumer Health division 10.2 Sales impacted by supply issues in some OTC products, Ethicals grew 14.5% and OTC grew by 8%, Pudin Hara grew 12.8%. Honitus franchise grew 3.7%. Strategic review for CHD completed and new initiatives planned during FY2011.

International Business division

28.7 Same currency growth at 37% (entirely volume led), Nigeria (59%), Egypt (40%), Levant (72%) and North Africa (74%) registered strong growth rates. Strong improvement in EBITDA margins due to operating leverage.


Exhibit 7: Segment-wise performance (Consolidated)

Y/E Mar (Rs cr) 1QFY11 1QFY10 % chg F20Y10 FY2009 % chg Total Gross Sales 924.4 773.6 19.5 3,390.9 2,834.1 19.6

Consumer Care 704.4 584.3 20.5 2,602.8 2,174.9 19.7

Consumer Health 69.1 62.7 10.2 279.6 244.6 14.3

Foods Business 131.7 106.5 23.7 415.8 335.1 24.1

Retail 3.2 1.7 90.4 9.2 6.0

Others 16.0 18.4 (12.9) 83.6 73.6 13.6

Total PBIT 199.1 167.4 18.9 856.3 665.5 28.7

Consumer Care 160.3 139.7 14.7 713.5 553.1 29.0

Consumer Health 17.9 16.3 9.7 73.6 71.3 3.3

Foods Business 23.1 13.7 68.0 72.5 56.8 27.7

Retail (2.2) (2.8) (9.3) (17.8)

Others 0.1 0.4 (87.8) 6.0 2.1 180.7

PBIT Margin (%) 21.5 21.6 25.3 23.5

Consumer Care 22.8 23.9

27.4 25.4

Consumer Health 26.0 26.1 26.3 29.2

Foods Business 17.5 12.9

17.4 16.9

Retail 0.0 0.0 0.0 0.0

Others 0.3 2.2 7.1 2.9



July 26, 2010 5

Update on acquisition of Hobi group (Turkish firm)

Dabur acquires Hobi group for US$69mn, at 2.6x sales and 15x EBITDA: Dabur India, through its wholly-owned subsidiary Dabur International, has entered into an agreement to acquire 100% stake in the Hobi group of firms, a Turkish personal care products firm for a consideration of US $69mn at 2.6x sales and 15x EBITDA based on CY2009 financials of a turnover of US $27mn and EBITDA of ~4.6mn (17% OPM). Hobi group of firms include 3 companies – 1) Hobi Kozmetik (core products/distribution arm), 2) Zeki Plastik (captive packaging company, and 3) Ra Pazarlama (sales and marketing company). The transaction is likely to be completed in 3QFY2011 post regulatory formalities. The current management will continue to run the operations.

About Hobi Kozmetik: Set up in 1974, Hobi Kozmetik is a leading personal care

products company in Turkey and markets a wide range of hair (gels, conditioners, shampoos and styling products) and skin care products (skin care, liquid soaps and wet wipes) under the Hobby and New Era brands. It enjoys leadership position in the hair gel category with 35% market share and has a wide sales and distribution network covering 15,851 sales points in Turkey. It is present in 35 countries, and exports account for 10% of the company’s turnover.

Acquisition rationale: The acquisition provides Dabur entry into attractive new

markets like Turkey via complementary product portfolio. Management has stated that Hobi’s current brand portfolio is under-leveraged and there exists scope for further expansion in hair care and skin care. Moreover, there exist synergistic benefits in terms of utilising the sales and distribution network of Hobi to market Dabur products in Turkey and extend the Hobi brands into other IBD markets like MENA, Africa and South Africa.

Deal to be EPS neutral, likely funding via mix of internal accruals and debt: With

Hobi’s acquisition, Dabur has completed its first overseas acquisition (acquired domestic companies like Balsara and Fem care in the past). Apart from synergistic benefits through complimentary product portfolio and cross-selling opportunities, we believe Hobi’s acquisition would help Dabur consolidate its position in the Middle East and North African markets giving fillip to its international business. However, at 2.6x sales and 15x EBITDA, we believe the acquisition is little expensive (unlike recent acquisitions in FMCG space done at ~2x sales). Dabur is well placed to fund the acquisition via mix of internal accruals and debt. Assuming a 50:50 mix, the deal is likely to be EPS neutral.

Exhibit 8: Preliminary financials post Hobi acquisition by Dabur, deal to be EPS neutral

(Rs cr) Pre Hobi Post Hobi

Comments FY11E FY12E FY11E FY12E Net Sales 3,987 4,636 4,060 4,804 ~2-4% rise in top-line post consolidation Dabur 3,987 4,636 3,987 4,636 Hobi - - 73 168 6 months consolidation in FY2011, 15% yoy growth in FY2011 and FY2012 EBITDA 738 872 750 901 OPM (%) 18.5% 18.8% 18.5% 18.7% (17% OPM in Hobi, margin neutral post integration) Depreciation 66.9 73.1 69.1 78.1 Interest 8.0 3.3 18.5 10.8 Modeling in Rs175cr of debt, balance funding through internal accruals PAT 567.3 677.4 567.4 684.3 Assuming consolidated tax rate at ~19-20% NPM (%) 14.2% 14.6% 14.0% 14.2% EPS (Rs) 6.5 7.8 6.5 7.9 Deal likely to be EPS neutral



July 26, 2010 6

Investment Rationale

Niche positioning to drive consistent growth: Dabur’s niche positioning based on its ayurvedic/herbal positioning offers it an attractive and unique berth in terms of product portfolio. Moreover, its well balance and diversified portfolio across high-growth categories like skin care, home care and foods coupled with its strong rural distribution network places Dabur in a sweet spot in terms of growth. We model in a robust 17% CAGR in revenues over FY2010-12E with health supplements, skin care, home care and foods leading growth.

Margins to sustain aided by pricing power and diversified input mix: We expect Dabur to sustain its margins at ~18.5-19% levels aided by: 1) strong pricing power (Dabur undertook ~5% price hikes in the latter part of 1QFY2011, which is likely to reflect in the ensuing quarters), 2) diversified input mix and low dependence on oil derivatives (witnessing up-trend), and 3) improving profitability in its high-growth international business (reflected in last two quarters).

Valuations at significant premium to historical levels: During the last three

months, Dabur outperformed the Sensex by ~14% widening its premium to the benchmark to 90% vis-à-vis the five-year average of 42%. At the CMP of Rs204, the stock is trading at rich valuations of 26.2x FY2012E EPS, which is at significant premium to its historical valuations.

Outlook and Valuation Post the 1QFY2011 results we have marginally tweaked our top-line estimates upwards by ~2% to factor in stronger growth in core categories like: 1) oral care, 2) health supplements and 3) home care. We expect the hair care and CHD to witness up-tick in 2HFY2011E. However, we have revised our earnings estimates marginally downwards to model in higher ad-spends and lower gross margins in the domestic business. We have not modeled in financials of the Hobi group as we await further details. Nonetheless, the deal is likely to be EPS neutral.

Exhibit 9: Change in Estimates

Old Estimate New Estimate % chg

(Rs cr) FY11E FY12E FY11E FY12E FY11E FY12E

Revenue 3,931 4,525 3,987 4,636 1.4 2.5

OPM (%) 19.1 19.2 18.5 18.8 (59bp) (39bp)

EPS (Rs) 6.7 7.8 6.5 7.8 (2.7) (0.2)


During FY2010-12E, we expect Dabur to post a CAGR of 17% in top-line aided by steady volume growth in its core CCD categories of oral care, home care and skin care and foods coupled with robust growth in its international business. We expect Dabur’s OPMs to sustain at ~18.5-19% levels aided by sharp profitability improvement in international business, better product mix (premium product launches like Uveda) and higher operating leverage. We have modeled in a healthy 16% CAGR in earnings aided by robust top-line growth and consistent margins. However, owing to the recent run up in the stock price, at the CMP of Rs204, the stock is trading at rich valuations of 26.2x FY2012E EPS of Rs7.8 leaving little room for upside. Hence, we maintain Reduce on the stock, with a Target Price of Rs195 (based on 25x FY2012E earnings).


July 26, 2010 7

Exhibit 10: Key Assumptions (Consolidated) Y/E March (Rs cr) FY2009 FY2010 FY2011E FY2012E Consumer Care Division (CCD) 2,030 2,326 2,750 3,177 Hair Care 650 738 834 955 Oral Care 365 407 489 570 Health Supplements 386 464 562 657 Digestives & Candies 142 157 176 196 Baby Oil & Skin care 101 135 165 195 Home Care 122 126 151 172 Foods 264 317 374 433 CHD 239 275 310 345 IBD 478 604 754 928 Others 87 95 103 110 Fem Care - 92 105 121 Total Gross Sales 2,834 3,391 4,023 4,681 Less: Excise Duty 29 25 36 44 Net Sales 2,805 3,366 3,987 4,636

(yoy growth %) Consumer Care Division (CCD) 12.0 14.6 18.2 15.5 Hair Care 23.0 13.6 13.0 14.5 Oral Care 4.8 11.5 20.0 16.5 Health Supplements 11.3 20.4 21.0 17.0 Digestives & Candies 11.8 10.8 12.0 11.0 Baby Oil & Skin care 14.0 33.2 22.0 18.0 Home Care 9.7 3.3 20.0 14.0 Foods 14.4 20.0 18.0 16.0 CHD 18.9 15.0 13.0 11.0 IBD 39.9 26.3 25.0 23.0 Others 13.1 9.1 8.0 7.0 Fem Care - - - - Total Gross Sales 16.6 19.6 18.6 16.3 Net Sales 18.8 20.0 18.5 16.3



July 26, 2010 8

Exhibit 11: Peer Valuation Company Reco Mcap CMP TP^ Upside P/E (x) EV/Sales (x) RoE (%) CAGR # (Rs cr) (Rs) (Rs) (%) FY11E FY12E FY11E FY12E FY11E FY12E Sales PAT Asian Paints Neutral 24,137 2,516 2,461 (2.2) 28.2 23.5 3.2 2.7 39.9 38.5 15.5 15.3

Colgate Reduce 11,549 849 798 (6.0) 26.9 23.5 4.9 4.3 117.3 108.8 14.3 7.8

Dabur Reduce 17,577 204 195 (5.6) 31.2 26.2 4.4 3.7 39.9 39.1 17.4 16.0 GSKCHL Reduce 7,538 1,792 1,622 (9.5) 27.5 23.2 3.0 2.5 27.7 27.8 17.8 18.8

GCPL Accumulate 11,745 363 398 9.7 27.8 21.9 3.7 3.1 31.6 28.7 45.3 22.7

HUL Reduce 57,104 262 237 (9.6) 25.9 23.1 2.8 2.5 73.5 72.1 10.8 8.6

ITC Neutral 112,114 298 310 4.1 23.7 21.1 5.0 4.4 31.4 30.1 14.4 15.2

Marico Reduce 7,616 125 115 (8.3) 27.0 22.9 2.6 2.2 36.6 32.3 14.4 17.4

Nestle Neutral 28,851 2,992 2,955 (1.2) 36.7 30.4 4.7 4.1 118.2 118.6 16.5 20.4

Source: Company, Angel Research, Note: # denotes CAGR for FY2010-12E, ^ In case of Neutral recommendation, TP = Fair value

Exhibit 12: Angel v/s Consensus estimates Top-line (Rs cr) FY2011E FY2012E EPS (Rs) FY2011E FY2012E Angel estimates 3,987 4,636 Angel estimates 6.5 7.8 Consensus 3,950 4,587 Consensus 6.9 8.2 Diff (%) 0.9 1.1 Diff (%) (5.1) (4.5)


Exhibit 13: Absolute returns of Dabur v/s Sensex


Exhibit 14: One-yr forward P/E Band


Exhibit 15: One-yr forward P/E chart

Source: Company, Angel Research, Note: Red-line indicates 5-year average

Exhibit 16: One-yr forward Premium v/s Sensex chart

Source: Company, Angel Research, Note: Red-line indicates 5-year average

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July 26, 2010 9

Profit & Loss Statement (Consolidated) Rs crore Y/E March FY2007 FY2008 FY2009 FY2010 FY2011E FY2012E

Gross sales 2,080 2,396 2,834 3,391 4,023 4,681

Less: Excise duty 37 35 29 25 36 44

Net Sales 2,043 2,361 2,805 3,366 3,987 4,636

Total operating income 2,043 2,361 2,805 3,366 3,987 4,636

% chg 9.5 15.6 18.8 20.0 18.5 16.3

Total Expenditure 1,693 1,952 2,335 2,733 3,249 3,764

Cost of Materials 971 1,115 1,376 1,539 1,874 2,188

Advertising Exp 256 296 343 484 566 649

Personnel 167 199 235 280 319 366

Others 300 341 381 428 490 560

EBITDA 350 409 470 633 738 872

% chg 20.3 17.0 14.9 34.5 16.6 18.2

(% of Net Sales) 17.1 17.3 16.8 18.8 18.5 18.8

Depreciation& Amortisation 41 42 49 56 67 73

EBIT 309 367 421 577 671 799

% chg 19.0 18.9 14.7 37.0 16.3 19.1

(% of Net Sales) 15.1 15.6 15.0 17.2 16.8 17.2

Interest & other Charges 15 17 23 13 8 3

Other Income 26 34 47 39 38 44

(% of PBT) 8.1 8.8 10.5 8.8 10.5 6.4

Share in profit of Associates - - - - - -

Recurring PBT 319 384 445 603 701 839

% chg 24.5 20.3 15.7 35.5 16.2 19.8

Extraordinary Expense/(Inc.) - (0) - - - -

PBT (reported) 319 385 445 603 701 839

Tax 37 51 54 98 131 159

(% of PBT) 11.7 13.2 12.1 13.2 12.1 16.3

PAT (reported) 282 334 391 504 569 680

Add: Share of associates - - - - - -

Less: Minority interest (MI) (0.9) (0.1) (0.4) 0.8 2.0 2.5

PAT after MI (reported) 283 334 391 504 567 677

ADJ. PAT 283 334 391 504 567 677

% chg 24.7 18.0 17.2 28.7 12.7 19.4

(% of Net Sales) 13.9 14.1 13.9 15.0 14.2 14.6

Basic EPS (Rs) 3.3 3.9 4.5 5.8 6.5 7.8

Fully Diluted EPS (Rs) 3.3 3.8 4.5 5.8 6.5 7.8

% chg 24.7 18.0 17.2 28.7 12.7 19.4


July 26, 2010 10

Balance Sheet (Consolidated) Rs crore Y/E March FY2007 FY2008 FY2009 FY2010 FY2011E FY2012E

SOURCES OF FUNDS

Equity Share Capital 86 86 87 87 87 87

Preference Capital 0 0 0 0 0 0

Reserves& Surplus 393 531 732 1,187 1,490 1,811

Shareholders Funds 480 618 819 1,274 1,577 1,898

Minority Interest 4 5 5 8 8 8

Total Loans 160 99 228 179 94 39

Deferred Tax Liability 24 3 7 12 12 12

Total Liabilities 668 725 1,058 1,474 1,692 1,958

APPLICATION OF FUNDS

Gross Block 610 685 799 1,151 1,286 1,405

Less: Acc. Depreciation 238 264 299 355 422 495

Net Block 372 421 500 796 864 910

Capital Work-in-Progress 7 44 59 92 116 140

Goodwill 0 0 0 0 0 0

Investments 81 204 347 264 264 264

Current Assets 640 774 951 1,206 1,536 1,973

Cash 61 77 148 273 317 554

Loans & Advances 181 223 249 370 439 510

Other 399 475 553 563 781 909

Current liabilities 452 732 808 887 1,091 1,332

Net Current Assets 189 42 143 319 445 640

Misc Exp 20 14 9 3 3 3

Total Assets 668 725 1,058 1,474 1,692 1,958

Cash Flow Statement (Consolidated) Rs crore Y/E March FY2007 FY2008 FY2009 FY2010 FY2011E FY2012E

Profit before tax 319 384 445 603 701 839

Depreciation 41 42 49 56 67 73

Change in Working Capital (79) 24 (95) 56 (106) (44)

Interest / Dividend (Net) 15 17 23 13 8 3

Direct taxes paid 37 51 54 98 131 159

Others (37) (25) (27) 35 (14) (8)

Cash Flow from Operations 222 392 342 664 524 704

Inc./ (Dec.) in Fixed Assets (45) (124) (129) (384) (159) (144)

Inc./ (Dec.) in Investments (33) (113) (122) 83 0 0

Cash Flow from Investing (79) (237) (251) (301) (159) (144)

Issue of Equity 2 5 5 0 0 0

Inc./(Dec.) in loans 56 (61) 128 (48) (85) (55)

Dividend Paid (Incl. Tax) 177 66 130 177 228 265

Interest / Dividend (Net) 15 17 23 13 8 3

Cash Flow from Financing (134) (139) (19) (238) (321) (323)

Inc./(Dec.) in Cash 10 16 72 124 44 237

Opening Cash balances 51 61 77 148 273 317

Closing Cash balances 61 77 148 273 317 554


July 26, 2010 11

Key Ratios (Consolidated) Y/E March FY2007 FY2008 FY2009 FY2010 FY2011E FY2012E

Valuation Ratio (x)

P/E (on FDEPS) 62.6 53.1 45.3 35.2 31.2 26.2

P/CEPS 54.4 46.8 40.0 31.6 27.9 23.5

P/BV 36.7 28.5 21.5 13.9 11.2 9.3

Dividend yield (%) 0.7 0.7 0.9 1.1 1.3 1.7

EV/Sales 8.7 7.5 6.3 5.2 4.4 3.7

EV/EBITDA 50.5 43.0 37.5 27.6 23.5 19.6

EV / Total Assets 26.4 24.3 16.7 11.9 10.3 8.7

Per Share Data (Rs)

EPS (Basic) 3.3 3.9 4.5 5.8 6.5 7.8

EPS (fully diluted) 3.3 3.8 4.5 5.8 6.5 7.8

Cash EPS 3.7 4.4 5.1 6.5 7.3 8.7

DPS 1.4 1.5 1.7 2.3 2.6 3.5

Book Value 5.6 7.1 9.5 14.7 18.1 21.8

Returns (%)

RoCE (Pre-tax) 47.9 52.7 47.3 45.6 42.4 43.8

Angel RoIC (Pre-tax) 46.3 50.8 47.5 45.8 42.3 46.6

RoE 57.8 60.8 54.4 48.2 39.9 39.1

Turnover ratios (x)

Asset Turnover 3.4 3.4 3.5 2.9 3.1 3.3

Inventory / Sales (days) 45.9 46.8 48.9 49.3 50.0 50.7

Receivables (days) 25.4 26.6 23.1 22.5 21.5 20.9

Payables (days) 64.6 70.8 62.7 59.6 59.6 59.0

Net working capital (days) 22.9 (5.4) (0.7) 5.0 11.8 6.8


July 26, 2010 12

Research Team Tel: 022 - 4040 3800 E-mail: [email protected] Website: www.angeltrade.com

Disclaimer

This document is solely for the personal information of the recipient, and must not be singularly used as the basis of any investment decision. Nothing in this document should be construed as investment or financial advice. Each recipient of this document should make such investigations as they deem necessary to arrive at an independent evaluation of an investment in the securities of the companies referred to in this document (including the merits and risks involved), and should consult their own advisors to determine the merits and risks of such an investment.

Angel Broking Limited, its affiliates, directors, its proprietary trading and investment businesses may, from time to time, make investment decisions that are inconsistent with or contradictory to the recommendations expressed herein. The views contained in this document are those of the analyst, and the company may or may not subscribe to all the views expressed within. Reports based on technical and derivative analysis center on studying charts of a stock's price movement, outstanding positions and trading volume, as opposed to focusing on a company's fundamentals and, as such, may not match with a report on a company's fundamentals.

The information in this document has been printed on the basis of publicly available information, internal data and other reliable sources believed to be true, but we do not represent that it is accurate or complete and it should not be relied on as such, as this document is for general guidance only. Angel Broking Limited or any of its affiliates/ group companies shall not be in any way responsible for any loss or damage that may arise to any person from any inadvertent error in the information contained in this report.

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Note: Please refer to the important `Stock Holding Disclosure' report on the Angel website (Research Section). Also, please refer to the latest update on respective stocks for the disclosure status in respect of those stocks. Angel Broking Limited and its affiliates may have investment positions in the stocks recommended in this report.

Disclosure of Interest Statement Dabur 1. Analyst ownership of the stock No 2. Angel and its Group companies ownership of the stock Yes 3. Angel and its Group companies' Directors ownership of the stock No 4. Broking relationship with company covered No Note: We have not considered any Exposure below Rs 1 lakh for Angel, its Group companies and Directors. Ratings (Returns) : Buy (> 15%) Accumulate (5% to 15%) Neutral (-5 to 5%) Reduce (-5% to 15%) Sell (< -15%)

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