Dabur India Is Targeting Growth through Acquisitions

Dabur's famous Chyawanprash

Dabur's famous Chyawanprash
Dabur's famous Chyawanprash | Source
Dabur India share price movement
Dabur India share price movement | Source

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Can Dabur India start producing sanitary napkins? Will it be successful in it?

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Dabur India - share price movement

 
 
 
Weekly H/L
113.3
104.65
Monthly H/L
114.4
103.2
52 Weeks H/L
122
92.05
 
( 17 Jun 11 )
( 1 Feb 12 )
Delivery / Var+ELM %
98.86
12.5
Ex Date
29-Jun-11
 
Dabur India - share price movement

Dabur India - Latest Financial Results

(in Cr.)
12-Mar
11-Dec
FY11-12
Revenue
983.09
1,052.37
3,759.33
Net Profit
132
101.5
463.24
EPS
0.76
0.58
2.66
Cash EPS
0.86
0.64
3.04
OPM %
18.53
18.2
18.94
NPM %
13.43
9.64
12.32
Dabur India - Latest Financial Results

Dabur India - Stock Market Position

Quantity Traded
77,25,886
Deliverable Quantity (gross across client level)
72,27,038
% of Deliverable Quantity to Traded Quantity
93.54%
Dabur India - Stock Market Position

Dabur India Is Targeting Growth through Acquisitions

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Dabur India Is Targeting Growth through Acquisitions

Hundred Years Of History

Good Results


Dabur India Ltd has come out with a good result for the quarter ended 31.03.12 as compared to the previous quarter. While revenue has declined, net profit has gone up (see tables). Net profit margin has gone up to a healthy level of 13.4%. The shares of Dabur India are traded in the Indian stock markets at Rs.107 now (NSE 04.05.12). The highest and lowest prices recorded by the shares of Dabur India in the last one year are Rs.122 and Rs.92 respectively. The face value of the company’s shares is Rs.1.


Growth In Middle East And North Africa


Financial analysts are bullish on this counter and they are quite right. The company no doubt had pressure on cost of inputs and incurred higher advertisement expenses which reduced operating profit margin to 15.2% from 19.4% in the third quarter. But the company seems to have recovered from the effects and is progressing quite satisfactorily. Dabur India is engaged in the personal products business. It has posted a good growth in the Middle East with a good growth in hair crème, shampoos and toothpastes. Dabur India acquired low margin business enterprises Namaste Laboratories and Hobi Group. It has to incur heavy marketing expenses to boost these two acquisitions. Dabur India also has a good presence in the North Africa region.


Own Distribution Force


Dabur India plans to expand its capacity. Its new production facility in Nigeria will start production in the second quarter of the current financial year. Dabur India plans to invest Rs.100 crore in the next two years in setting up production plants in Eastern and Southern Africa. Dabur India is creating its own distribution force in order to reduce its dependence on other distributors. This move will also enable the company to further increase its rural penetration. Already Dabur India is receiving 50% of its revenues from rural sales.


Own Media Planning Agency


Dabur India has its own media planning agency to plan for its advertisement and to decide where to place the advertisements. That way, the company minimizes around 22% commission which it would have to shell out to a third party agency. Tie-ups with several media houses also helped in reducing advertisement cost for the company. Advertisement expenses form around 14% of the company’s sales turnover.


Unconnected Diversifications


Burman family is the major shareholder in Dabur India. Interestingly, Espirito Santo Investment Bank (ESIB), a global investment bank and securities firm, has entered into a joint venture with the Burman family. The reason is for expanding its equity research business in India. The Burmans are also set to enter luxury car business. They will be taking care of the operations and sales of the British sports car maker Caterham Cars. Luxury car business and equity research business are not connected with the main business of Dabur India. If anything fails, it will be a setback for the company as well.


Sri Lanka Venture


Dabur India plans to set up a unit in Sri Lanka shortly. It will be a subsidiary called Dabur Lanka Pvt Ltd. Dabur India is also planning to set up an export oriented unit to produce fruit juices. Dabur India’s retail venture New U is trying to consolidate itself against tough competition. Dabur India is planning to enter aroma products market.


Hundred Years Of History


Dabur India has a chequered history spanning more than hundred years. It was set up in 1884 by Dr S K Burman in Calcutta. Calcutta always enjoyed a special status in British India as it was the capital city initially before the British shifted to Delhi. The first R&D unit was established in 1919, the year of Jalianwala Bagh massacre of Generay Dyer. In 1949, the company launched Dabur Chyawanaprash in tin packaging. In 1998, the Burman family handed over the management of the company to the professional experts. It crossed the coveted figure of Rs.1000 crore in turnover in the year 2000. It is now heading for the figure of Rs.4000 crore. Marketing of herbal and auurvedic products has helped the company to build a brand image and increase its turnover.


Double The Growth


To double its growth, it is focusing on Africa now. Dabur India acquired Ajanta Pharma’s 30 Plus brand last year. It is eyeing on more acquisitions now. With new acquisitions, the company is targeting a turnover of Rs.5000 crore in the next one year. Dabur India had to shut its Egypt operations along with Marico Industries due to unrest in that country last year. But shortly it reopened the plant.


Invest


At the current marker price of Rs.107, one can invest in the shares of Dabur India for medium to long term holding for decent returns. The stock market position and the high 93.54 % of Deliverable Quantity to Traded Quantity indicates that short term gains are possible. The volumes support this.

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Comments 3 comments

chamilj profile image

chamilj 4 years ago from Sri Lanka

Nice Stock Review! Thanks.


nanospeck profile image

nanospeck 4 years ago

Thanks thats and excellent review. I'm considering adding dabur to my hub about best companies to invest in, after reading your insightful article.


ramkimeena profile image

ramkimeena 4 years ago from India Author

Dear chamilj and nanospeck,

I thank you for your valuable comments.

Best wishes to both of you,

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