Analysis Report : Dabur (BUY; Estimated Price: Rs. 510)

Dabur 

About The Company

Dabur was founded in 1884 by Dr. S. K. Burman in Calcutta to make health care products. It has portfolio of over 381 products in 21 product categories over 1000 SKUs. It is the world’s largest Ayurvedic medicine & related products manufacturer and natural Health Care Company. It has 20 ultra-modern manufacturing units spread around the globe and market in over 100 countries. Dabur’s overseas revenue accounts for over 31% of the total turnover. Its annual turnover was 7806 crores in FY 2014-15.
Its 5 master brands are Dabur, Vatika, Hajmola, Real and Fem. Financial position of the company is strong and it mostly relies on the share capital more than debt. The company has a wide distribution network, covering over 2.8 million retail outlets with a high penetration in both urban and rural markets. 

Shareholding Pattern 

Particulars	As on 31st March, 2015
	No. of share holders	% of share holders	No. of shares held	% of share holding
Directors, Promoters and family members	27	0.02	1197243149	68.16
FIIs	451	0.38	368149134	20.96
Mutual Funds/UTI	25	0.02	2551024	0.15
Financial Institutions/ Banks/ Insurance Cos’	33	0.03	80318146	4.57
NRIs	3180	2.69	6170974	0.35
Corporates (including clearing members)	1208	1.03	16897198	0.95
Individuals	113137	95.83	85182365	4.85
Total	118061	100	1756511990	100

Directors, Promoters and family members have huge amount of stake in the company which shows their beliefs in the potential of the company. There is no major change in % of shareholding amongst various entities.

Business Description

Dabur has two major strategic business units (SBU) viz. Consumer Care Business and International Business Division (IBD). Consumer Care Business caters consumer needs across Personal Care, Health Care, Ayurvedic Health products, Professional range products, Active Pharmaceutical Ingredients (API) & medicines, Home Care and Foods categories while International Business Division (IBD) caters to the health and personal care needs of customers across different international markets such as Nepal, Bangladesh, the Middle East, North & West Africa, EU and the US.

Products

Health Supplements includes Glucose D, Dabur Honey, Dabur Chyawanprash etc. Improvement and introduction of new products will help company to maintain the growth in this category. Skin Care has Fem Range, Dabur Gulabari Range, and Dabur Uveda Range. Revenue from these products did not grow significantly in 2014-15 because of fire incident in the Baddi plant in the 3^rd quarter of the same year. Company has low market share though sales of Fem is high. Hair Care consists of Vatika, Dabur Almond, Dabur Amla Hair oils, Dabur Vatika Shampoo etc. Oral Care category comprise of Dabur Lal range, Meswak, Babool etc. This category has lower growth but by differentiated positioning and relaunch of babool, Dabur has outperformed industry and achieved double digit growth. Thus, it may not possible to achieve this growth continuously. Food Products are divided into Real, Real Active+, Burrst, Dabur Hommade, Dabur Lemoneez, Dabur Capsico etc. Home Care Products includes Air Freshners and Mosquito repellents. OTC and Ethicals consists of Dabur Broncold, Dabur Lipstat, Dabur Mensla, and Rheumatic.

In almost every category Dabur has either launched a new product or improved an existing one in the financial year 2014-15, both in Indian as well as oversea market.  

Manufacturing facilities

Dabur has 20 ultra-modern manufacturing units spread around the globe. There are 11 manufacturing facilities in India, out of which two main units are at Baddi (Himachal Pradesh) and Pantnagar (Uttaranchal). It has made Strategic partnerships with leading multinational food and health care companies to introduce innovations in products and services. Dabur has established six modern manufacturing facilities spread across South Asia, Middle East and Africa to optimize production by utilizing local resources and the most modern technology available.

Industry Analysis

FMCG is the fourth largest sector in our country. It has grown at an annual average of about 11 per cent over the last decade.  The overall FMCG market is expected to increase at 14.7% CAGR to touch US$ 110.4 billion during 2012-2020, with the rural FMCG market anticipated to increase at a CAGR of 17.7 per cent to reach US$ 100 billion during 2012-2025. Urban markets account for the major share (65%) of total revenues in the consumer durables sector in India. There is a lot of scope for growth from rural markets. Food products is the leading segment having 43% of the overall market. Personal care (22 %) and fabric care (12%) come next in terms of market share.  Growing awareness, easier access, and changing lifestyles have been the key growth drivers for the consumer market.

Market Analysis

Overall sales of Dabur have increased at a 17% CAGR in the past 5 years. Sales outside India have grown at 29% CAGR over the last 5 years. There are five chief categories - Hair Oil, Shampoo, Oral Care, Skin Care and Fruit Juices. In Hair Oil sector Dabur has 15% Market share, whereas in Shampoo sector and Skin care sector it has only 6% and 7% respectively. In Oral care sector 13% of the market share belongs to Dabur. The company leads the market in the Fruit Juice sector with 52% of Market Share.

A variety of initiatives have been taken to increase the market share. Project “50/50” was launched during the year 2014-15 to enhance the field efficiencies & leverage the potential of Top 130 towns which contribute to 50% of urban consumption. Project “double” targets to increase rural coverage from 44000 to 60000 over next 3 years. Project “CORE” was executed to extend the reach in Chemist outlets across top 140 towns and enhance the thrust on OTC range of products. 

Financial Analysis 

Financial performance of Dabur was very good in the last 5 years. Both sales and profit after tax increased at a 17% CAGR in the past 5 years. PAT and EBITDA decreased from 2010-11 to 2011-12 but after that they have increased continuously. Market capitalization of Dabur in 2014-15 become 2.8 times than that of 2010-11 with negligible changes in total number of shares.

                       Consolidated Profit and Loss Statement Last 5 years 

Growth of sales is more in international business and others (CAGR 27.61% for last 5 years) as compared to consumer care business (CAGR 13.84% for last 5 years).

Consolidated Balance Sheet Last 5 years 

Dabur’s long term liabilities have decreased while short term liabilities have doubled over the past 5 years.  Its cash conversion cycle has improved. Days Sales Outstanding has increased while Days Payable Outstanding has increased significantly which shows bargaining power of Dabur over suppliers.

Consolidated Profit & Loss Statement of last Two December Quarters

Consolidated Profit and Loss Projected 5 yrs.

Consolidated Balance Sheet Projected 5 Years

Price Performance

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About The Author

This report has been Prepared by Akshay Morbiya and Published by Aakash Raval who are pursuing MBA from Institute of Management, Nirma University located in Ahmedabad, India.

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