Dabur India was established in 1884 and is the third largest FMCG Company specializing in ayurvedic, indigenous medical system of India. It has now manufacturing base and presence in United Kingdom, UAE, Bangladesh, Nepal and Egypt. It is also exporting its products to many other countries. It owns strong and well known brands such as
Health care
Dabur Amla, Hajmola, Pudin Hara, Dabur Chyawanprash, Dabur Honey
Oral Care
Lal Dant Manjan, Babool, Meswak, Bianca, Promise
Personal Care
Vatika, Anmol
Home Care
Odomos, Odonil, Sanifresh
and real range of fruit juices.
It is deriving health solutions from ayurvedic, herbal, natural and other such native well understood medicinal practices through its well organized marketing & research and development team. It has successfully extended the medicinal benefits associated with local practices to its health and oral care brands. It has very good recall for having floated and successfully managed so many nationally well known brands. The exports and expansion of manufacturing facilities abroad have helped Dabur to improve margins. The international business now covers 25 countries located in six continents. It is serving the developed countries with noticeable Indian presence such as US, Europe etc with dealer net work to promote and distribute the products. The focus has always been the over the counter herbal health care products.
Financials
The key financial figures of the company are summarized below
| Rs Millions | Dec ‘ 07 | Sep ‘ 07 | Jun ‘ 07 | Mar ‘ 07 | Dec ‘ 06 |
| Sales | 5253.5 | 4750.7 | 4453.1 | 4447.6 | 5087 |
| Operating profit | 1050.5 | 1003.8 | 656.2 | 734.1 | 904.7 |
| Interest | 5.7 | 10 | 13.7 | 0.2 | 18.4 |
| Gross profit | 1087.5 | 1048.8 | 699.8 | 749 | 905.7 |
| Depreciation | 74.8 | 66.2 | 70.3 | 64.2 | 79.4 |
| Net profit / loss | 881.4 | 858.1 | 540.6 | 657 | 717.3 |
| Equity capital | 864 | 864 | 863.9 | 862.9 | 574.1 |
| EPS (Rs) | 1.02 | 0.99 | 0.63 | 0.76 | 1.25 |
| OPM (%) | 20.00% | 21.13% | 14.74% | 16.51% | 17.78% |
| GPM (%) | 20.70% | 22.08% | 15.71% | 16.84% | 17.80% |
| NPM (%) | 16.78% | 18.06% | 12.14% | 14.77% | 14.10% |
The current quarter performance has been in line with the past year and the previous quarter. The sales and net profit have grown. The net margins and operating margins have also improved over the past year. The company is deriving advantage of the investments it has made in the past in fixed assets.
Comparison with peers
The financials of the company for the quarter ended Dec 07 are compared and presented below
| Rs Millions | Dabur India | HUL | Godrej Ind | Colgate | Marico |
| | | | | | |
| Sales Turnover | 5164.4 | 36874 | 1909.7 | 3675.1 | 4155.9 |
| Other Income | 42.7 | 1597 | 117.6 | 228.2 | 30.2 |
| Total Income | 5207.1 | 38471 | 2027.3 | 3903.3 | 4186.1 |
| Total Expenses | 4113.9 | 31232 | 1737.5 | 3063.9 | 3616.8 |
| Operating Profit | 1050.5 | 5642 | 172.2 | 611.2 | 539.1 |
| Gross Profit | 1093.2 | 7239 | 289.8 | 839.4 | 569.3 |
| Interest | 5.7 | 25.8 | 92.5 | 2 | 28.9 |
| PBDT | 1087.5 | 7987.7 | 364.7 | 837.4 | 540.4 |
| Depreciation | 74.8 | 368.8 | 65 | 50.5 | 79.2 |
| PBT | 1012.7 | 7618.9 | 299.7 | 786.9 | 461.2 |
| Tax | 131.3 | 1304.5 | -1.4 | 182.2 | 58.9 |
| Net Profit | 881.4 | 6314.4 | 301.1 | 604.7 | 402.3 |
| Earnings Per Share | 1.02 | 2.9 | 0.94 | 44.46 | 0.66 |
| Equity | 864 | 2177.5 | 319.8 | 136 | 609 |
| OPM | 20.34% | 15.30% | 9.02% | 16.63% | 12.97% |
| NPM | 16.93% | 16.41% | 14.85% | 15.49% | 9.61% |
Dabur tops the group under operating and net margins due to the strong and well known brands. Larger equity base is weighing down the positive results as the sales are not spread over as in the case of Hindustan Uni Lever and Godrej. However it has built potential to sustain capture of additional market share through strategic business expansion.
What does the future holds for Dabur?
The company is planning to enter into retail segment leverage on its wide range of popular brands and benefit from the food processing forays. It has proposed to infuse equity of Rs. 140 Crores to fund 350 stores in the coming 5 years. The stores are expected to coexist with the distributor network of nearly 1500 entities.
The exports have grown by more than 50%. The international operations are likely to contribute nearly 17% of the turnover from the present 14% by 2010. In India, the brands are yielding great returns to the company posting more than 30% under personal care and health care segments. This is an excellent achievement considering that the brand promotion does not cost beyond 12% of the expenses.
The strength of the company lies in its unassailable position in the health care products. It has made recent entry into personal care products market which is large enough to accommodate niche and small players. The company has also been selective in advertising spend to expand its base in non traditional markets of western and southern market where visibility of its products have been low. Acquisitions and international business expansion have added at market place additional capacities to shore up the top line and lend more muscle to margins.
We anticipate the growth story to continue and investors can hope for higher returns as the stock is quoting at a reasonable discount of its future earnings. Teh short term investors will also gain when buys are made around Rs. 95.