Dabur India rating – Buy: Volume growth came as a disappointment

Volumes grew 25.4% y-o-y on a base of -14.6% (Q3 noticed 18.1% y-o-y soar on a base of 5.6% y/y).

Dabur India (Dabur) undershot our estimates posting y-o-y development of 25.3%/25.6%/25.1% in Q4FY21 income/Ebitda/adjusted PAT. Home volumes at 25.4% y-o-y (base of -14.6%) too belied our estimate, partially on account of a correction within the pipeline. Decrease Covid-19 circumstances in Q4FY21 pushed down healthcare development price on a two-year foundation (3.7% CAGR in Q4FY21 versus 19.1% CAGR in Q3FY21); nevertheless, with circumstances rising, we count on healthcare development to perk up.

In gentle of the present setting, we imagine Dabur is properly positioned to capitalise on customers’ rising choice for natural and pure merchandise, and is a powerful rural play (45% income share). Preserve Purchase with a revised TP of Rs 630.

Q4FY21: Development slows sequentially; consolidated margin regular
What we preferred: Consolidated gross margin compressed by solely 35bps y-o-y whereas consolidated Ebitda margin edged up 5bps y-o-y regardless of standalone gross margin and Ebitda margin compression of 248bps y-o-y and 324bps y-o-y, respectively.

What we didn’t like: Volumes grew 25.4% y-o-y on a base of -14.6% (Q3 noticed 18.1% y-o-y soar on a base of 5.6% y/y).

HPC grew 32.6% y-o-y on a base of -18.9%. Oral care – up 42.1% y-o-y (base -15.8% y-o-y) – led development with 120bps market share achieve. Shampoos (up 33.4% y-o-y), pores and skin & salon (up 37.9% y-o-y) and hair oils (up 24.6% y-o-y) sustained sturdy restoration. Home juices was up 27.1% y-o-y. Worldwide enterprise grew 21% CC.

Q4FY21 convention name: Key takeaways
Total inflation is about 5% throughout uncooked supplies. The corporate elevated costs by 3% and can take additional value hikes. The corporate has applied the Steady Replenishment System (CRS), which might take away the necessity for pre-season loading, thereby impacting stock by 5–six days. E-commerce contributes 5–6% of complete income.

Outlook: Optimistic; keep ‘BUY’
We count on volumes to be sturdy, driving company-specific methods in addition to growth of the natural market and strengthening rural distribution. Factoring in rise in tax price as Dabur strikes out of the MAT regime, we’re chopping the TP to `630 (from `675) however retain ‘BUY/SO’. The inventory is buying and selling at 42.3x FY23e EPS.