{"id":2059,"date":"2021-07-14T12:20:01","date_gmt":"2021-07-14T12:20:01","guid":{"rendered":"http:\/\/www.assetmultiplier.co.in\/blog\/?p=2059"},"modified":"2021-07-14T12:20:01","modified_gmt":"2021-07-14T12:20:01","slug":"not-very-concerned-about-3rd-wave-impact-on-biz-dabur-india","status":"publish","type":"post","link":"https:\/\/www.assetmultiplier.co.in\/blog\/2021\/07\/14\/not-very-concerned-about-3rd-wave-impact-on-biz-dabur-india\/","title":{"rendered":"Not very concerned about 3rd wave impact on biz\u2013 Dabur India"},"content":{"rendered":"<p><b>Update\u00a0on the Indian Equity Market:<\/b><\/p>\n<p><span style=\"font-weight: 400;\">On Wednesday, NIFTY ended marginally higher at 15,809 (+0.3%) as it could not sustain the intraday higher levels. Among the sectoral indices, IT (+3.2%), PHARMA (+0.3%), and MEDIA (+0.2%) ended higher while REALTY (-1%), PSU BANK (-0.5%), and AUTO (-0.3%) led the losers. Among the stocks, WIPRO (+7%), TECHM (+2.6%), and INFY (+2.1%) led the gainers while MARUTI (-1.4%), ADANIPORTS (-1%), and HINDUNILVR (-1%) led the losers.\u00a0<\/span><\/p>\n<p><span style=\"text-decoration: underline;\"><span style=\"font-weight: 400;\">Excerpts of an interview with Mr. Mohit Malhotra, CEO of Dabur India (DABUR) published in Business Standard on 14<\/span><span style=\"font-weight: 400;\">th<\/span><span style=\"font-weight: 400;\"> July 2021:<\/span><\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Share of Dabur\u2019s healthcare portfolio went up to 45 percent from 30 percent and essentials like oral did well, while the share of skincare, hair oil, and foods shrank.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Being well aware that the discretionary portfolio may not do well, the company has diversified into areas like edible oil and launched several other products.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The inflation has increased the input costs by 5-6 percent as it has hit the entire bucket of the business.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The company has taken a 3 percent price hike and initiated cost optimisation measures. The company has planned to cut down Rs 1000 mn worth of costs in FY22, which won\u2019t be enough. The pressure on operating margin can\u2019t be ruled out till the December quarter.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Sales through e-commerce channels have grown to 8 percent from 2 percent before Covid. In FY21, in spite of travel restrictions, Dabur earned 6 percent of the sales through e-commerce.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The company has begun construction of their eighth plant, in Madhya Pradesh at an estimated cost of Rs 5,500 mn to meet current and future demand, taking advantage of the incentives provided by the government under its \u2018Atmanirbhar Bharat\u2019 program. The plant will help the company meet the demand for the next 10-12 years.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Earlier, the company was spending 5-6 percent on advertising through digital media, but now the company is putting 25 percent of its budget into digital. Last year, the company increased its media spending, but now it has cut it down to 8-10 percent of sales as growing costs are a threat.<\/span><\/li>\n<\/ul>\n<p><b>Asset Multiplier Comments<\/b><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">People being eager to go back to offices and as the government has ramped up vaccination, it seems that the impact of the 3<\/span><span style=\"font-weight: 400;\">rd<\/span><span style=\"font-weight: 400;\"> covid wave may not be as severe on the operations of Dabur as the second wave.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The increase in demand for health and wellness products is expected to continue post-Covid. The increase in market penetration of these products bodes well for Dabur.<\/span><\/li>\n<\/ul>\n<p><b>Consensus Estimate<\/b><span style=\"font-weight: 400;\">: (Source: market screener website)<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The closing price of DABUR was \u20b9 586\/- as of 14-July-2021.\u00a0 It traded at 56x\/ 49x the consensus earnings estimate of \u20b9 10.5\/ 12.1 for FY22E\/FY23E respectively.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The consensus target price of \u20b9 590\/- implies a PE multiple of 49x on FY23E Earnings of \u20b9 12.1\/-.<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">Disclaimer: &#8220;The views expressed are for information purposes only. The information provided herein should not be considered as investment advice or research recommendation. The users should rely on their own research and analysis and should consult their own investment advisors to determine the merit, risks, and suitability of the information provided.&#8221;<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Update\u00a0on the Indian Equity Market: On Wednesday, NIFTY ended marginally higher at 15,809 (+0.3%) as it could not sustain the intraday higher levels. Among the sectoral indices, IT (+3.2%), PHARMA (+0.3%), and MEDIA (+0.2%) ended higher while REALTY (-1%), PSU BANK (-0.5%), and AUTO (-0.3%) led the losers. Among the stocks, WIPRO (+7%), TECHM (+2.6%), [&hellip;]<\/p>\n","protected":false},"author":13,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[429],"tags":[],"_links":{"self":[{"href":"https:\/\/www.assetmultiplier.co.in\/blog\/wp-json\/wp\/v2\/posts\/2059"}],"collection":[{"href":"https:\/\/www.assetmultiplier.co.in\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.assetmultiplier.co.in\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.assetmultiplier.co.in\/blog\/wp-json\/wp\/v2\/users\/13"}],"replies":[{"embeddable":true,"href":"https:\/\/www.assetmultiplier.co.in\/blog\/wp-json\/wp\/v2\/comments?post=2059"}],"version-history":[{"count":2,"href":"https:\/\/www.assetmultiplier.co.in\/blog\/wp-json\/wp\/v2\/posts\/2059\/revisions"}],"predecessor-version":[{"id":2061,"href":"https:\/\/www.assetmultiplier.co.in\/blog\/wp-json\/wp\/v2\/posts\/2059\/revisions\/2061"}],"wp:attachment":[{"href":"https:\/\/www.assetmultiplier.co.in\/blog\/wp-json\/wp\/v2\/media?parent=2059"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.assetmultiplier.co.in\/blog\/wp-json\/wp\/v2\/categories?post=2059"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.assetmultiplier.co.in\/blog\/wp-json\/wp\/v2\/tags?post=2059"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}