Dabur - Aspiration To Achieve Ebitda Margin Of ~20%: Dolat Capital

NDTV Profit’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages, asset managers and research agencies. These reports offer NDTV Profit’s subscribers an opportunity to expand their understanding of companies, sectors and the economy..Dolat Capital Report.We recently interacted with the management of Dabur India Ltd. to understand the current demand scenario in the fmcg industry, trend in rural markets, pricing actions and growth outlook etc. Below are the key takeaways from our interaction: Rural recovery a wait and watch Over past few quarters, Indian fmcg industry has witnessed gradual recovery, especially in the urban markets. In line with the industry trends, Dabur has posted low single digit volume growth in recent quarters led by strong growth observed in foods business. The rural growth has continued to lag urban growth due to inflation and unseasonal rainfalls. The management indicated that they have not observed significant signs of improvement in rural markets, albeit rural recovery remains key to Dabur’s growth going ahead. .Aspiration to achieve Ebitda margin of ~20% In FY23, gross margin had contracted by 230 basis points on a YoY basis due to unprecedented material inflation.Nevertheless, gross margin expanded by 290 bps YoY to 48.3% in Q2 FY24 led by deflation in raw material prices.The improvement in gross margin was re-invested in media spends which led to restrict Ebitda margin expansion to mere 50 bps YoY.We believe, media investments (ad spends to be ramped up from ~7% to 8-9% going ahead) to would drive market share growth, going ahead.The management expects Ebitda margins at ~19.5% during FY24E and aspires to achieve Ebitda margins of ~20% in the long run..Focused on enhancing power brands Dabur’s FMCG portfolio includes nine power brands, with eight power brands in India and one in international market. These brands contribute ~70% to overall revenues. Our interaction with the management suggested that growth was missing across categories. Furthermore, Chyawanprash portfolio was impacted due to warm winters. Nevertheless, Dabur Honey and Real has posted decent performance. We believe, power brands would continue to drive growth going forward..Click on the attachment to read the full report:.Relaxo Footwears - Value Growth Would Be Supported By Volume Growth: Dolat Capital.DISCLAIMERThis report is authored by an external party. NDTV Profit does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of NDTV Profit..Users have no license to copy, modify, or distribute the content without permission of the Original Owner.

Dabur - Aspiration To Achieve Ebitda Margin Of ~20%: Dolat Capital

In India, Dabur has the widest distribution networks spanning across urban and rural markets, covering 7.9 million retail outlets as on H1 FY24.

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