Home Investment Memo: DABUR

Investment Memo: DABUR

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Our Rating: HOLD

Mehabe score: 4
G Factor: 4
Piotski Score: 6
The stock has a rating HOLD. The mehabe team score is reflective of its fundamental and technical merits. A rating above 8 is considered good buy. The stock has a G-Factor of 4 and Piotski score of 6.

Description

Dabur India is one of the leading fast moving consumer goods (FMCG) players dealing in consumer care and food products.(Source : 202003 Annual Report Page No:280)

Main Points

In Chawanprash segment they have around 60% Market share in India.
In Honey segment they have around 40% Market share in India.Site: DABURMain Symbol: DABUR

Price Chart

Market Cap: Rs 103,985 cr Price: 588.0 Trading pe: 61.4x
Book-value: 43.4/share Div yield: 0.81 % Earning yield: 2.02%
Face-value: 1.00/share 52week high: 605.00 52week low: 462.95

Technical Analysis

  • Stock trades at 588.0, above its 50dma 567.64. It also trades above its 200dma 535.42. The stock remains bullish on techicals
  • The 52 week high is at 605.00 and the 52week low is at 462.95

Price Chart

P/E Chart

Sales and Margin

Strengths

– is almost debt free.
– has a good return on equity (ROE) track record: 3 Years ROE 24.88%
– has been maintaining a healthy dividend payout of 39.98%
-Debtor days have improved from 30.46 to 21.44 days.

Weakness

– Stock is trading at 13.57 times its book value
-The company has delivered a poor sales growth of 3.97% over past five years.

Competition

– The industry trades at a mean P/E of 42.1x. Dabur India trades at the industry’s max P/E of 61.41x. DABUR trades at a P/E of 61.4x
– Industry’s mean G-Factor is 4.4 while the mean Piotski score is 9.0. DABUR has a G-Factor of 4 and Piotski scoreof 6.
– Average 1 month return for industry is 8.8%. The max 1- month return was given by Kaya Ltd: a return of 48.23 %

Quarterly Results

  • Sales for period ended Mar 2021 is Rs 2337.0 cr compared to Rs 1865.0 cr for period ended Mar 2020, a rise of 25.3%
  • Operating Profits reported at Rs 442.0 cr for period ended Mar 2021 vis-vis 352.0 for period ended Mar 2020 .
  • Operating Margins expanded 3.9 bps for period ended Mar 2021 vis-vis Mar 2020 .
  • The EPS for Mar 2021 was Rs 2.14 compared to Rs 2.78 for previous quarter ended Dec 2020 and Rs 1.59 for Mar 2020

Profit & Loss Statement

Profit&Loss Comments

  • Company reported sales of Rs 9562.0 cr for period ended Mar 2021 vis-vis sales of Rs 8685.0 cr for the period ended Mar 2020, a growth of 9.2%. The 3 year sales cagr stood at 7.4%.
  • Net Profit reported at Rs 1693.0 cr for period ended Mar 2021 vis-vis sales of Rs 1445.0 cr for the period ended Mar 2020, rising 14.6%.
  • Company recorded a Net Profit CAGR of 7.7% over the last 3 years

Balance Sheet Statement

Cash Flow Statement

Cash Flow comments

  • CashFlow from operating activities was positive.
  • CashFlow from operating activities: Rs 2115.0 cr for period ended Mar 2021 vis-vis Rs 1614.0 cr for period ended Mar 2020

Sales Growth

Profit Growth Statement

Profit Growth Statement

Stock Price CAGR

Return of Equity

General Comments

– The company has had stable/constant Return on Equity (RoE) metric. The RoE on Last Year basis was 24.0% compared to 25.0% over the last 3 Years.
– The stock has given a return of 17% on a 1 Year basis vis-vis a return of 16% over the last 3 Years.
– The compounded sales growth on a TTM bassis is 10% vis-vis a compounded sales growth of 7% over the last 3 Years.
– The compounded profit growth on a TTM basis is 12% vis-vis a compounded profit growth of 7% over the last 3 Years.

Ratios

Shareholding Pattern

– FII shareholding has remained largely constant. The Jun 2021 fii holding stood at 20.59% vis-vis 19.77% for Mar 2021
– Public shareholding has remained largely constant. The Jun 2021 public holding stood at 7.38% vis-vis 7.51% for Mar 2021

Conclusion

– is almost debt free.
– has a good return on equity (ROE) track record: 3 Years ROE 24.88%
– has been maintaining a healthy dividend payout of 39.98%
-Debtor days have improved from 30.46 to 21.44 days. – Stock is trading at 13.57 times its book value
-The company has delivered a poor sales growth of 3.97% over past five years.

  • The business fundamentals of the stock remain stable. Stronger near term results will build interest in the stock. We suggest to wait for a upturn in business performance.
  • Technically, the stock remains above its 50 DMA 567.64 and is trading at 588.0, thus bullish price action wise.
  • Thus, overall we retain a HOLD on the stock.

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