25 March 2014
Update | Sector: Consumer
Dabur
BSE Sensex
22,055
S&P CNX
6,584
CMP: INR179
TP: INR200
Buy
Building blocks in place; project CORE a catalyst
Expect 19% EPS CAGR over FY14-16; Buy
Stock Info
Bloomberg
Equity Shares (m)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
M.Cap. (INR b)
M.Cap. (USD b)
DABUR IN
1,743.8
185/128
-3/-5/16
312.2
5.1
Financial Snapshot (INR Million)
Y/E March
2014E 2015E 2016E
Sales
71.0 82.8 96.0
EBITDA
Adj. PAT
Adj. EPS (INR)
EPS Gr. (%)
BV/Sh.(INR)
RoE (%)
RoCE (%)
Payout (%)
Valuations
P/E (x)
P/BV (x)
EV/EBITDA (x)
Div. Yield (%)
32.8
11.3
26.1
1.3
27.0
9.4
21.2
1.6
23.2
7.8
18.1
1.8
11.5
9.2
5.3
19.6
15.3
34.6
37.8
42.7
14.0
11.2
6.4
21.7
18.5
34.8
38.8
42.7
16.1
13.0
7.5
16.5
22.2
33.7
40.0
42.7
Our interaction with the management reaffirms our preference for Dabur
as top pick in the tier-II Consumer space.
We expect Dabur’s volume growth to remain in the 8-10% band. Project
CORE would provide an additional catalyst for FY15 and FY16.
Gross margin expansion of 100bp and operating leverage in International
division would help achieve 19% EPS CAGR over FY14-16.
Dabur offers the best earnings visibility in the tier-II Consumer space. Buy.
No material change in demand; expect 8-10% volume growth
According to the management, demand conditions have not changed materially
over the last six months. Early signs of pick-up in urban demand, which the
management had alluded to during the 3QFY14 Conference Call, are still
evident. If there is no further worsening of the macro environment, we believe
Dabur should sustain its 8-10% volume growth band in FY15.
Project CORE: Doubling urban chemist reach
Dabur has launched Project CORE (Chemist Outlet & Range Expansion) to drive
penetration of its Healthcare portfolio in urban chemist outlets. It intends to
more than double its reach to 75k outlets. We draw comfort from Dabur’s
superior execution of Project DOUBLE, where it more than doubled its rural
reach in two years without diluting margins.
Focus areas for FY15: F&B, Healthcare and Hair Care
We expect Dabur to focus on Food & Beverages (F&B), Healthcare and Hair Care
in FY15. We expect new launches/renovations in these categories. Dabur is test-
launching Milk Shakes and Drinking Yoghurt; one of these could see national
rollout in FY15, in our view.
Shareholding pattern (%)
Dec-13 Sep-13 Dec-12
Promoter
Domestic Inst
Foreign
Others
68.6
4.5
20.3
6.6
68.6
4.0
21.0
6.4
68.7
5.1
19.9
6.3
Mix improvement to drive up margins
We expect gross margin to expand 100bp in FY15, driven by portfolio mix
improvement coupled with annual price hikes of 4-5%. However, the gross
margin expansion is unlikely to flow through to operating margin in entirety, as
we expect Dabur to remain competitive on ad spends to support new launches.
We build in 70bp operating margin expansion in FY15.
Stock Performance (1-year)
Dabur
Sensex - Rebased
200
180
160
140
120
Reiterate Buy, with a target price of INR200
Consistent volume growth with steady margin expansion should drive our
expected 19% EPS CAGR over FY14-16. We like the management’s strategy of
building long-term growth drivers by enhancing distribution reach and driving
portfolio innovation. Dabur offers the best volume led earnings growth visibility
and remains our top pick in our tier-II consumer coverage. Maintain Buy with a
target price of INR200.
Gautam Duggad
(Gautam.Duggad@MotilalOswal.com); +91 22 3982 5404
Manish Poddar
(Manish.Poddar@MotilalOswal.com); +91 22 3027 8029
Investors are advised to refer through disclosures made at the end of the Research Report.

Dabur
No material change in demand; expect 8-10% volume growth
According to the management, demand conditions have not changed materially
over the last six months.
Our interactions with discretionary players (Paints) suggest pick-up in urban
demand in the last two quarters, led by modest improvement in consumer
sentiment. However, we note that, by and large, staples players are not seeing
material improvement in consumer sentiment/demand.
The urban-rural gap has narrowed in favor of urban over the last three quarters.
We expect Dabur’s volume growth to trend in the 8-10% band, higher than tier-
II peers like Godrej Consumer, Emami and Marico.
Dabur’s volume growth has remained steady
17
12
14
10
9
9
10
11
Volume growth (%)
12
12
12
10
9
11
11
9
Source: Company, MOSL
Marico’s volumes have decelerated…
Volume growth (%)
14
16 15 15
14 14 13
5
17 16
10 9
8
10
4
3
…as have Emami’s
25
23
Volme Growth (%)
21
16
11
8
10
15 16 16 16
13
6
6
1.5
Source: Company, MOSL
Source: Company, MOSL
Project CORE: Doubling urban chemist reach
Dabur has undertaken project CORE (Chemist Outlet & Range Expansion) to
expand its presence in the urban chemist channel.
It is targeting to more than double its reach in this channel to 75k outlets, and
add 148 towns.
Dabur will be leveraging its Health Supplements and OTC Healthcare portfolio to
build presence in these channels.
It has added 350 feet on street to implement this project.
We note that Dabur has recently executed project DOUBLE to more than double
its rural reach (from 14,865 villages in March 2011 to 37,950 villages in
December 2013) in the 10 largest states. More importantly, despite increasing
presence in rural channel, Dabur’s margins did not take a hit.
2
25 March 2014

Dabur
Project CORE should result in higher throughput per store by enabling Dabur to
play its full Healthcare portfolio in these outlets.
The Healthcare segment enjoys higher margins than Dabur’s average CCD
margins. Successful execution of project CORE should, therefore, aid margin
expansion.
Project DOUBLE expanded rural coverage
Direct village coverage
36,196
30,091
17,882
37,950
14,865
Mar'11
Mar'12
Mar'13
Sep'13
Dec'13
Source: Company, MOSL
Project CORE to drive chemist coverage with focus on selected states
Source: Company, MOSL
25 March 2014
3

Dabur
Focus areas for FY15: F&B, Healthcare and Hair Care
Dabur will focus on Food & Beverages (F&B), Healthcare and Hair Care in FY15.
We expect new launches/renovations in these categories. Dabur is test-
launching Milk Shakes and Drinking Yoghurt; one of these could see national
rollout in FY15, in our view.
Dabur’s Hair Oil performance has been weak of late. It has recently introduced
Vatika Olive
and
Vatika Enriched Coconut Hair Oil with Hibiscus.
We expect
Dabur to introduce more variants in its Hair Oil portfolio, going forward.
Given Dabur’s focus on Healthcare and its target of doubling chemist coverage,
we foresee expansion of the Healthcare portfolio in FY15.
Dabur’s innovation momentum has picked up pace and should stand it in good
stead to maintain the volume growth band in 8-10% range, in our view.
Haircare performance has dipped
Category-wise growth rates
FY09
Hair Care
Health
Supplements
Oral Care
Foods
Digestives
Skin care
Home Care
IBD (organic)
23.0
11.0
5.0
23.0
12.0
14.0
10.0
39.9
FY10
13.6
20.4
11.5
20.0
10.8
33.2
3.3
26.3
FY11
6.7
23.0
12.1
28.3
8.9
16.8
32.5
17.6
FY12
16.1
8.1
9.5
26.7
12.6
9.7
15.4
29.7
FY13
11.8
17.1
10.3
24.3
4.4
16.2
25.3
19.4
9M
FY14
7.6
13.2
12.5
19.6
14.9
14.6
22.4
24.4
Hair Care growth (%)
19.6 19.8
15.9
10.4
13.2 13.9
9.6
11.8
4.0
6.9
Source: Company, MOSL
Dabur’s recent innovations
Source: Company
25 March 2014
4

Dabur
Mix improvement to drive up margins
Dabur’s raw material (RM) basket has remained stable. The management’s
earlier guidance of 100bp gross margin expansion in FY15 (3QFY14 conference
call) should materialize. Dabur has delivered 150bp gross margin expansion in
9MFY14.
We expect Dabur to take annual price hike of 4-5%. This coupled with mix
improvement on account of better throughput from Healthcare portfolio should
drive our expected 70bp operating margin expansion in FY15.
Advertising spends should remain in the 14-14.5% range. In 9MFY14 advertising
spends were 14.5%.
International business is also likely to benefit from operating leverage and
benign RM dynamics. 9MFY14 international margins are up 300bp v/s FY13
average.
We model 19% EPS CAGR over FY14-16 for Dabur, among the highest in our tier-
II coverage universe.
Double-digit sales growth maintained
Net Sales (INR m)
31.4
29.8
34.5
23.021.4 20.6
12.3 12.3 12.9
14.9 16.8
Growth (% YoY)
9MFY14 operating margin up 60bp YoY
Gross Margin (%)
58
54
50
46
42
EBITDA Margins (%)
26
18
10
2
-6
Source: Company, MOSL
Source: Company, MOSL
International business benefitting from operating leverage
Subsidiary Operating margins (%)
Advertising spends to remain in 14-14.5% band
ASP (% of sales)
15.7
14.4
12.5
13.4
11.9
15.4
15.2
13.0
17
17
12.6
13.6
10.1
16
12
15
Source: Company, MOSL
Source: Company, MOSL
25 March 2014
5

Dabur
Reiterate Buy, with a target price of INR200
Dabur offers the best volume led earnings growth visibility in our tier-II
consumer coverage.
We like the management’s strategy of building long-term growth drivers by
enhancing distribution reach in both urban as well as rural markets, and driving
portfolio innovation.
Maintain
Buy
with a target price of INR200.
Worsening of rural consumption trends is a key risk factor.
25 March 2014
6

Dabur
Worsening of rural
Financials and
consumption trends is a key risk factor.
valuation
Income statement
Y/E March
Net Sales
Change (%)
EBITDA
EBITDA Margin (%)
Depreciation
EBIT
Interest
Other Income
Extraordinary items
PBT
Tax
Tax Rate (%)
Min. Int. & Assoc. Share
Reported PAT
Adjusted PAT
Change (%)
2011
40,774
20.3
7,736
19.0
952
6,784
-291
586
0
7,079
-1,390
-19.6
3
5,686
5,686
12.3
2012
52,832
29.6
8,680
16.4
1,032
7,648
-538
797
0
7,906
-1,464
-18.5
3
6,439
6,439
13.2
2013
61,464
16.3
9,650
15.7
847
8,803
-589
1,316
0
9,530
-1,826
-19.2
24
7,680
7,680
19.3
2014E
70,954
15.4
11,496
16.2
1,056
10,440
-525
1,497
0
11,412
-2,214
-19.4
11
9,187
9,187
19.6
(INR Million)
2015E
82,768
16.6
13,966
16.9
1,190
12,776
-549
1,787
0
14,015
-2,817
-20.1
13
11,185
11,185
21.7
2016E
96,007
16.0
16,094
16.8
1,280
14,814
-531
2,047
0
16,330
-3,282
-20.1
19
13,029
13,029
16.5
Balance sheet
Y/E March
Share Capital
Reserves
Net Worth
Debt
Deferred Tax
Total Capital Employed
Gross Fixed Assets
Less: Acc Depreciation
Net Fixed Assets
Capital WIP
Investments
Current Assets
Inventory
Debtors
Cash & Bank
Loans & Adv, Others
Curr Liabs & Provns
Curr. Liabilities
Provisions
Net Current Assets
Total Assets
2011
1,741
12,170
13,911
16,280
-189
30,232
11,489
-4,351
7,138
324
4,197
19,768
7,085
3,555
2,805
6,324
8,855
7,394
1,461
10,913
30,231
2012
1,742
15,473
17,215
17,810
-274
35,058
13,596
-5,033
8,563
268
4,825
25,108
8,239
4,617
4,484
7,768
11,281
9,605
1,676
13,827
35,058
2013
1,742
20,253
21,995
10,500
-84
32,536
15,596
-6,110
9,486
350
5,102
23,859
7,704
5,103
4,252
6,800
14,026
7,933
6,093
9,832
32,536
2014E
1,742
24,859
26,601
10,504
-84
37,156
17,596
-7,166
10,430
433
7,103
27,740
8,860
5,878
4,898
8,104
16,314
9,119
7,195
11,426
37,157
(INR Million)
2015E
2016E
1,742
1,742
30,466
36,996
32,208
38,738
11,441
9,791
-84
-84
43,713
48,612
19,596
21,596
-8,356
-9,636
11,240
11,960
433
433
11,045
13,092
32,829
38,132
10,311
11,960
6,856
7,953
5,713
6,627
9,948
11,592
19,599
22,769
10,591
12,285
9,007
10,484
13,230
15,362
43,713
48,612
E: MOSL Estimates
25 March 2014
7

Dabur
Financials and valuation
Ratios
Y/E March
Basic (INR)
Basic (INR)
EPS
Cash EPS
Book Value
DPS
Valuation (x)
Payout (incl. Div. Tax.)
Valuation(x)
P/E
Cash P/E
Price / Book Value
EV/Sales
Profitability Ratios (%)
EV/EBITDA
Dividend Yield (%)
Turnover Ratios
Profitability Ratios (%)
RoE
RoCE
Leverage Ratio
Turnover Ratios (%)
2011
2012
2013
2014E
2015E
2016E
3.3
2.7
8.0
1.2
35.2
49.3
59.2
20.1
0.0
0.0
0.7
3.7
3.1
9.9
1.4
37.6
43.6
51.9
16.3
5.5
33.3
0.9
4.4
3.9
12.6
1.8
40.6
36.5
41.0
12.8
4.6
29.1
1.1
5.3
4.7
15.3
2.3
42.7
30.5
34.5
10.5
3.9
24.2
1.4
6.4
5.7
18.5
2.7
42.7
25.1
28.1
8.7
3.3
19.7
1.7
7.5
6.7
22.2
3.2
42.7
21.5
23.9
7.2
2.8
16.8
2.0
40.9
30.7
37.4
30.0
35.0
36.3
34.6
37.8
34.8
38.8
33.7
40.0
Cash flow statement
Y/E March
OP/(Loss) before Tax
Depreciation
Interest
Direct Taxes Paid
(Inc)/Dec in Wkg Cap
CF from Op. Activity
(Inc)/Dec in FA & CWIP
(Pur)/Sale of Invt
CF from Inv. Activity
Inc/(Dec) in Net Worth
Inc / (Dec) in Debt
Divd Paid (incl Tax)
Others
CF from Fin. Activity
Inc/(Dec) in Cash
Add: Opening Balance
Closing Balance
2011
8,688
-952
294
1,330
-8,176
1,184
-9,503
-1,556
-11,059
0
14,487
-2,002
-1,729
10,756
881
1,923
2,805
2012
9,713
-1,032
258
1,464
-1,234
9,168
-2,052
-629
-2,680
0
1,531
-2,420
-3,919
-4,808
1,680
2,805
4,484
2013
10,498
-847
727
1,826
3,762
15,966
-2,082
-277
-2,359
1
-7,310
-3,117
-3,413
-13,839
-233
4,484
4,252
2014E
12,553
-1,056
971
2,145
-948
13,666
-2,083
-2,001
-4,084
2
4
-3,921
-5,021
-8,936
646
4,252
4,898
(INR Million)
2015E
15,156
-1,190
1,239
2,733
-989
16,949
-2,000
-3,942
-5,942
2016E
17,374
-1,280
1,516
3,184
-1,218
19,576
-2,000
-2,047
-4,047
2
2
937
-1,650
-4,773
-5,559
-6,358
-7,408
-10,192
-14,615
815
914
4,898
5,713
5,713
6,627
E: MOSL Estimates
25 March 2014
8

Dabur
NOTES
25 March 2014
9

Disclosures
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Dabur
This report is intended for distribution to institutional investors. Recipients who are not institutional investors should seek advice of their independent financial advisor prior to taking any investment decision
based on this report or for any necessary explanation of its contents.
MOSt and/or its affiliates and/or employees may have interests/positions, financial or otherwise in the securities mentioned in this report. To enhance transparency, MOSt has incorporated a Disclosure of
Interest Statement in this document. This should, however, not be treated as endorsement of the views expressed in the report.
Disclosure of Interest Statement
1. Analyst ownership of the stock
2. Group/Directors ownership of the stock
3. Broking relationship with company covered
4. Investment Banking relationship with company covered
DABUR INDIA LTD
No
No
No
No
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25 March 2014
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10