Dabur India reported 25.3% revenue growth in Q4 on account of degrowth in the base quarter with lockdown imposed in the last 10 days of the March quarter. Domestic sales grew 30.3% whereas international business saw 19.4% revenue growth. India business volume growth was 25.4%. All categories saw robust growth. Health supplements (Chyawanprash, Honey) sales grew 17.7% despite it being off-season for the products. OTC & Ethical continued the growth momentum with 34% & 39.1% growth, respectively. Oral care grew 42.1% with red toothpaste gaining market share. Similarly, hair oil, shampoos, Digestives also saw strong growth of 24.6%, 33.4% & 20%, respectively, largely on the back of increased out of home activity. Foods segment, which was significantly impacted in the corresponding quarter, saw 36.1% growth. With firm agri commodity prices & rising crude based derivative, gross margins increased 35 bps.

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Dabur India launched several new products last year to leverage the tailwinds of health, immunity & Ayurveda consumption tailwind. Further, it launched many products only on e-commerce channels as a pilot launch. The e-commerce channel has seen 100% growth in FY21 and is now contributing ~6% to the topline. ICICI Securities believes the second wave of the pandemic would further drive immunity boosting products, which would continue the growth momentum in health supplements, OTC & ethical portfolios. Further, ICICI Securities believes the oral care category is witnessing a huge shift towards naturals & Ayurveda products. Hence, Dabur India would be able to gain significant market share in the medium term. ICICI Securities expects 11.7% CAGR revenue in FY21-23E.

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ICICI Securities believes that Dabur India has taken select price increases to pass on rising commodity costs. Given 78 bps savings in overhead spends, 85 bps savings in employee spends & 126 bps increase in advertisement spends, the company was able to maintain its operating margins at 18.9%. Operating profit increased 25.6%. PAT was up 34% to Rs 377.3 cr on the back of strong growth in operating profit, stable taxation and higher other income.

Dabur India has been able to grow revenue by 10% in a challenging year. ICICI Securities believe health & immunity related tailwinds & related new products and increasing direct & rural distribution network (1.4 million outlets & 80000 villages) would help drive growth for the company. ICICI Securities expect 12.8% earnings CAGR in FY21-23E and maintain their BUY rating with target price of Rs 620/share.