Reviews

In this edition, we have reviewed Dabur India and Shoppers Stop. 

We suggest our reader-investors to HOLD in Dabur India and Shoppers Stop

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We had previously recommended Dabur India in volume 34, issue no. 2, dated December 24, 2018-January 6,2019 under the ‘Cover Story’ segment. 

It was recommended based on strong financial profile and robust brand portfolio of the company. The company is considered to be a fast-moving consumer goods (FMCG) company. It has products in various categories such as hair care, oral care, healthcare, skin care and foods. The company offers its products in foreign countries such as Middle East, Africa, South Asia, Europe and Americas as well. Dabur’s popular brands include Dabur Chyawanprash, Dabur Honey, Dabur Baby, Vatika, Hajmola, Real, Fem, etc. 

On the financial front for Q1FY20, the company posted net sales of Rs1,628.27 crore, which is an increase by 10.53 per cent compared to net sales of Rs1473.10 crore for Q1FY19. 

The PBDT increased by 12.01 per cent to Rs357.60 crore in Q1FY20 as against Rs319.24 crore in Q1FY19. The company’s net profit rose by 11.82 per cent to Rs257.81crore compared to net profit of Rs230.56 core in Q1FY19. 

Looking at the annual financial trend for FY19, the net sales of the company increased by 11.84 per cent Y-o-Y to Rs6,273.19 crore. PBDT increased by 9.25 per cent and stood at Rs1,612.18 crore for FY19 and Rs1,475.63 crore for FY18. The net profit increased by 17.9 per cent to Rs1,264.29 crore in FY19 from Rs1,072.05 crore in FY18. 

On the valuation front, the company is currently trading at a P/E of 58.05x on its TTM earnings against industry P/E of 52.27. 

The company has been engaged in improving distribution expansion strategy in rural India and thus increasing the reach of its products. Hence, we recommend a HOLD.

We had recommended Shoppers Stop in volume 34, issue no. 6, dated Feb 18-Mar 3, 2019, under the ‘Choice Scrip’. The stock was trading at Rs500.20 then and was recommended owing to healthy same store sales growth (SSSG), topline traction across all segments and reduction in debt. 

Shoppers Stop Ltd is in the retail segment. Shopper’s Stop is the largest chain of department stores at present in India. The business units of the company includes Shopper’s Stop, which is the flagship business division of the company offering international and domestic brands across categories such as apparel, accessories, cosmetics, home and kitchen ware as also its own exclusive brands. 

On the financial front, the net sales for Q4FY19 stood at Rs727.09 crore, up by 25 per cent, from Rs579.58 crore posted in the same quarter of the previous year. The company reported PBIDT of Rs26.05 crore for Q4FY19, posting a drop of 13.49 per cent from Rs30.11 crore posted in Q4FY18. The company posted a net loss of Rs9.93 crore in Q4FY19 from a net loss of Rs1.16 crore in the corresponding quarter of the previous year. 

On the annual front, the net sales were at Rs3,481 crore, down by 3.07 per cent in FY19 as against Rs3,591 crore posted in FY18. The PAT has climbed up by over 500 per cent to Rs78.75 crore in FY19 as opposed to Rs11.60 crore in FY18. Since our recommendation, the stock has fallen by 24.04 per cent. 

We recommend a HOLD as we expect a revival in the stock price in the near future.