Dabur

1QFY2011 Result Update | FMCG
July 26, 2010

Dabur India REDUCE
CMP Rs204
Performance Highlights Target Price Rs195
(Rs cr) 1QFY11 1QFY10 % yoy Angel Est % Diff Investment Period 12 Months
Revenue 916.5 742.7 23.4 864.9 6.0
EBITDA 136.7 118.2 15.6 144.9 (5.6) Stock Info
OPM (%) 14.9 15.9 (100bp) 16.8 (183bp) Sector FMCG
PAT 106.8 91.4 16.9 115.4 (7.5) Market Cap (Rs cr) 17,695
Source: Company, Angel Research Beta 0.4
52 Week High / Low 219/119
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, Avg. Daily Volume 1,50,010
earnings grew 17% yoy, below estimates, impacted by margin contraction and Face Value (Rs) 1
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 BSE Sensex 18,020
completed in 3QFY2011). It also announced a bonus issue of 1:1. We maintain Nifty 5,419
Reduce on the stock.
Reuters Code DABU.BO

Highest-ever volume growth, earnings disappoint: Dabur posted a healthy growth Bloomberg Code DABUR@IN
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 Shareholding Pattern (%)
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, Promoters 68.9
respectively. However, shampoos witnessed a contraction of 17.1%, while Fem MF / Banks / Indian Fls 10.5
registered muted growth of 8% yoy. Dabur’s earnings registered 17% yoy growth
FII / NRIs / OCBs 15.3
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 Indian Public / Others 5.3
due to higher ad spends (up 113bp yoy).

Outlook and Valuation: We remain bullish on Dabur’s diversified product
Abs. (%) 3m 1yr 3yr
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 Sensex 1.5 17.2 14.2
rich valuations of 26.2x FY2012E EPS of Rs7.8 leaving little room for upside. Dabur 15.1 56.6 94.9
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 Anand Shah
022-4040 3800-334
P/BV (x) 21.5 13.9 11.2 9.3
anand.shah@angeltrade.com
RoE (%) 54.4 48.2 39.9 39.1
RoCE (%) 47.3 45.6 42.4 43.8 Chitrangda Kapur
EV/Sales (x) 6.3 5.2 4.4 3.7 022-4040 3800-323
EV/EBITDA (x) 37.5 27.6 23.5 19.6 chitrangdar.kapur@angeltrade.com
Source: Company, Angel Research

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

Dabur|1QFY2011 Result Update

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 2


Exhibit 2: Strong top-line growth driven by volumes Exhibit 3: Records highest ever overall volume growth
25.0
1,000 25.0
19.5
20.0
800 20.0 16.0
14.0 15.0 14.2 13.3
15.0
10.0 11.0 11.0

(%)
600 15.0

(yoy %)
(Rs cr)

10.0
400 10.0
5.0
200 5.0 -

1QFY09

2QFY09

3QFY09

4QFY09

1QFY10

2QFY10

3QFY10

4QFY10

1QFY11
- -
1QFY09 3QFY09 1QFY10 3QFY10 1QFY11
Top-line (LHS) YoY growth (RHS)

Source: Company, Angel Research Source: Company, Angel Research

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
150 35.0 60.0 53.2 52.5 55.0 54.6 54.7 52.6
50.3 51.2 49.0
130 30.0 50.0
110 25.0 40.0
90 20.0
(Rs cr)

30.0
(yoy %)

20.7 19.1 19.1
(%)

70 15.0 18.1 16.6 17.7 15.9
20.0 14.4 14.9
50 10.0
10.0 16.4
30 5.0 13.5 11.3 11.2 13.2 15.3 14.2 14.6 13.6
10 - -

1QFY09 3QFY09 1QFY10 3QFY10 1QFY11 1QFY09 3QFY09 1QFY10 3QFY10 1QFY11

PAT (LHS) YoY growth (RHS) OPM Gross Margin A&P Spends


July 26, 2010 3


Exhibit 6: 1QFY2011 Category-wise growth (Consolidated)
Growth (%) Comments
Consumer Care Division 18.9 Largely volume led
Dabur Amla Hair Oil grew 18.9% (in spite of higher competition) and Vatika hair oil
Hair care 8.9 grew 22.2% (driven by focused marketing), Anmol coconut hair oil grew 15.6%;
Shampoo category declined 17.1% yoy due to disruptive competition.
Toothpastes grew 28.1%, Dabur Red grew 31.2%, Meswak grew 14.4% and
Oral care 20.2 Babool grew 29.4%. Dabur Red Toothpowder grew by 2.4% driven by consumer
activation and launch of Re0.5 SKU.
Glucose grew its strongest at 53.6% and Honey grew 17.7% (driven by new SKU).
Health supplements 42.8
Chyawanprash grew whopping 94% led by campaign for building immunity.
Hajmola tablets grew 17.7% and Hajmola candies grew 8.1%. For Hajmola, new
Digestives 14.7 variants and innovative consumer activations have been key drivers. Lal Tail has
grown at 14.2% driven by aggressive marketing.

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

Odomos grew 8.5%, Odonil grew 68.4% post re-launch and Sanifresh reported
Home care 31.5
33.6% growth. New launches – Odonil Pluggy and Odomos Oil
Crossed Rs100cr mark for a quarter driven by new Fruit Power campaign and
Foods division 21.2 improved on ground visibility, Real Juices grew 21%, Real Activ grew at 35%,
Hommade registered a strong growth of 37.2%.
Sales impacted by supply issues in some OTC products, Ethicals grew 14.5% and
Consumer Health division 10.2 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.
Same currency growth at 37% (entirely volume led), Nigeria (59%), Egypt (40%),
International Business
28.7 Levant (72%) and North Africa (74%) registered strong growth rates. Strong
division
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 4


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
Pre Hobi Post Hobi
(Rs cr) FY11E FY12E FY11E FY12E Comments
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 5


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 6


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 7


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

250% 250 18x 22x 26x 30x
Sensex Dabur

200% 200
Share Price (Rs)

150% 150

100% 100

50% 50

-
0%
Jul-05
Oct-05
Jan-06

Jul-06
Oct-06
Jan-07

Jul-07
Oct-07
Jan-08

Jul-08
Oct-08
Jan-09

Jul-09
Oct-09
Jan-10

Jul-10
Apr-05

Apr-06

Apr-07

Apr-08

Apr-09

Apr-10
Jul-07

Oct-07
Jan-08

Jul-08

Oct-08

Jan-09

Jul-09

Oct-09

Jan-10

Jul-10
Apr-07

Apr-08

Apr-09

Apr-10


Exhibit 15: One-yr forward P/E chart Exhibit 16: One-yr forward Premium v/s Sensex chart

40.0 120%
35.0 100%
30.0
80%
25.0
60%
20.0
15.0 40%
10.0 20%
5.0 0%
-
-20%
Jan-03

May-06

May-08

Jan-10
Nov-03
Jun-03

Sep-04
Feb-05
Jul-05
Dec-05

Oct-06
Mar-07

Dec-07

Oct-08
Mar-09

Jun-10
Apr-02
Aug-02

Apr-04

Aug-07

Aug-09

Nov-03
Jan-03
Jun-03

Feb-05
Jul-05
Dec-05
May-06
Oct-06
Mar-07

Dec-07
May-08
Oct-08
Mar-09

Jan-10
Jun-10
Apr-02
Aug-02

Apr-04

Aug-07

Aug-09
Sep-04

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

July 26, 2010 8


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 9


Balance Sheet (Consolidated) Rs crore
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
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 10


Key Ratios (Consolidated)
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 11


Research Team Tel: 022 - 4040 3800 E-mail: research@angeltrade.com 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.
Angel Broking Limited has not independently verified all the information contained within this document. Accordingly, we cannot testify,
nor make any representation or warranty, express or implied, to the accuracy, contents or data contained within this document. While
Angel Broking Limited endeavours to update on a reasonable basis the information discussed in this material, there may be regulatory,
compliance, or other reasons that prevent us from doing so.
This document is being supplied to you solely for your information, and its contents, information or data may not be reproduced,
redistributed or passed on, directly or indirectly.
Angel Broking Limited and its affiliates may seek to provide or have engaged in providing corporate finance, investment banking or
other advisory services in a merger or specific transaction to the companies referred to in this report, as on the date of this report or in
the past.
Neither Angel Broking Limited, nor its directors, employees or affiliates shall be liable for any loss or damage that may arise from or in
connection with the use of this information.
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%)

July 26, 2010 12

Dabur

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