PL First Cut - Dabur India 3Q24 -Rural Markets sees green shoots

*PL First Cut – Amnish Aggarwal – Head of Research, Prabhudas Lilladher Pvt Ltd*

Dabur India 3Q24 –Rural Markets sees green shoots

(CMP: Rs540| Mcap: 957bn |Rating: Accumulate)

Financial Performance:

>Revenues grew by 7% YoY to Rs32.6bn (PLe: Rs33.0bn)

>Gross margins expanded by 310bps YoY to 48.6% (Ple: 49.0%)

>EBITDA grew by 9.5% YoY to Rs6.7bn (PLe:Rs 6.8bn); Margins expanded by 48bps YoY to 20.5% (PLe:20.5%)

>Adj PAT grew by 6.2% YoY to Rs5.1bn (PLe:Rs5.3bn)

>Consumer care revenues grew 4.7% YoY while EBIT grew by 9.2%. Margins improved by 100bps YoY to 24.3%.

>Food segment revenues grew by 25.4% YoY while EBIT grew by 26.9%. Margins improved by 16bps YoY to 14%.

>Retail segment revenues grew by 4.1% YoY while EBIT grew by 34.8%. Margins improved by 43bps YoY to 2%.

>Interim Dividend of Rs. 2.75/share declared for FY 2023-24

Business performance:

>Domestic volumes grow by 6% -including Badshaah (PLe: 4%)

>Rural Demand grew 200bps ahead of urban

>Ad spends (7.5% of sales) grew 36% YoY for the consol business & co will continue to increase media spends in the near term.

>Market share gains led by gains in Chyawanprash & honey

>Healthcare category grew by 3% YoY with 15.1%/ -3%/ 6.9% growth in Digestives/OTC/Ethicals. Health Supplements were flat due to delay in onset of winter

>Home & Personal Care reported 6.6% growth YoY with 8.1%/4.5%/11.3% in Oral Care/Hair Oils/Shampoos

>Foods & Beverages grew by 6.7% collectively with Foods (including Badshaah) grew by 22% and Beverages grew by 6.9%

>IBD witnessed 11.7% YoY growth in constant currency terms

>Innovation is at 3.5% Sales

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Dabur reported a robust growth with revenue & volumes almost in line with our estimates. Rural markets recover as rural demand grew 200bps ahead of urban. We expect volume growth to sustain at current levels. Gross Margins/Adj Profits grew 3.1%/6.2% YoY. We have an Accumulate rating on the stock.

Stock trades at 37.2x FY26 EPS