COMPANY INITIATING REPORT

GEOJIT BNP PARIBAS Research

RETAIL EQUITY RESEARCH

BUY

Dabur India Ltd.

FMCG

Rating as per Largecap

BSE CODE:500096

NSE CODE: DABUR

Bloomberg CODE: DABUR IN

SENSEX: 28,773

12months investment period

CMP Rs286 TARGET Rs322

RETURN 13%

22nd September, 2016

32.0

Dividend Yield (%)

0.8

52 week high

320

52 week low

231

6m average volume (lakh)

15.1

Beta

0.3

Face value

1.0

Shareholding %

Q3 FY16

Q4 FY16

Q1 FY17

Promoters

68.1

68.1

68.0

FIIs

20.4

19.6

19.9

MFs/Insti

4.7

5.5

5.5

Public& Others

6.8

6.8

6.7

Total

100.0

100.0

100.0

Price Performance

3mth

6mth

1Year

(8%)

15%

3%

Absolute Sensex

8%

14%

12%

Relative Return*

(15%)

1%

(9%)

Absolute Return

*over or under performance to benchmark index

DABUR

Sensex (Rebased)

320

Sep-16

Aug-16

Jul-16

Jun-16

May-16

Apr-16

220

Mar-16

270

Jan-16

Currently, Dabur has 16 brands with a turnover of over Rs1bn, and three brands
with turnover of more than Rs10bn. Importantly, to enhance brand presence,
Dabur spends about 13-16% of its sales on ads every year. Daburs diverse
product portfolio (health supplements, hair care, home care etc) & presence in
niche categories has resulted in sales CAGR of robust ~16% over FY11-16. Further,
we expect revenue to grow at a CAGR of ~9% over FY16-18E due to three key
factors: 1) new products in its innovation pipeline, 2) expansion of distribution
network and 3) revival in rural demand from H2FY17 onwards.

176.1

Free Float

Feb-16

Bouquet of powerful brands

Outstanding Shares (cr)

Dec-15

Dabur, a 132 years old brand, has been the pioneer in Ayurveda based health &
personal care products in India. Dabur has a strong portfolio of powerful brands
including Real, Dabur Chyawanprash with the focus primarily on ANH offerings.
We believe that Dabur is set to gain from the emerging preference for ANH
products. Notably, the promotion of herbal products (contributes ~85% to
domestic sales of Dabur) by several of its peers will help in expanding the market.

49,780

Nov-15

Poised to gain disproportionately from herbal wave

50,319

Enterprise Value (cr)

Oct-15

Dabur India Ltd (Dabur), the leading Indian FMCG company, is also a
world leader in Ayurveda with a portfolio of over 250 Herbal/Ayurvedic
products. It operates in key consumer product categories like hair care,
oral care, health care, skin care, home care and foods.
Dabur has carved a niche through focused product differentiation brought
about by ANH (ayurvedic, natural & herbal) products.
Dabur has a wide distribution network, covering 5.3mn retail outlets, one
of the highest among FMCG companies.
Dabur is poised to benefit from revival in rural growth (contributing ~45%
to sales) led by better monsoon.
We are factoring 130bps increase in overall EBITDA margin to 19.3% by
FY18E driven by new premium offerings & prudent cost management.
We initiate Dabur with a Buy rating valuing the stock at 35x FY18E EPS
arriving at a target price (TP) of Rs322.

Company Data
Market Cap (cr)

Sep-15

Set to ride the herbal wave

Premiumisation strategy to play out well

Y.E Mar (Rs cr)

FY16

FY17E

FY18E

In order to enhance usage of its products, Dabur is launching premium

differentiated offerings across product categories. For instance, in Chyawanprash
category, Ratnaprash is available at 2x the price of base variant. Going forward,
we believe premium portfolio would help in expanding the margins.

Sales

8,454

8,876

9,967

8.0

5.0

12.3

1,520

1,637

1,922

18.0

18.4

19.3

1,253

1,361

1,620

17.5

8.6

19.1

7.1

7.7

9.2

Normal monsoons this year to improve prospects

Through Project Double, Dabur has almost tripled its rural penetration from
14,865 villages in FY11 to 44,128 villages in FY15. While rural economy has been in
slow lane in the past few years owing to poor monsoons, the rural demand is
expected to improve from H2FY17 onwards on account of better monsoons
coupled with governments focus on farm sector. Moreover, the implementation
of seventh pay commission & GST would bode well for the company.

Valuations Dabur is better placed than peers given its differentiated offerings,
leadership position & distribution reach. We expect revenue & PAT to grow at a
CAGR of 9% & 14% respectively over FY16-18E. Further, EBITDA margin is
expected to improve by 130bps to 19.3% on account of new product launches &
continued focus on premium products. We initiate Dabur with a BUY rating with
a TP of Rs322 at 35x FY18E EPS.

Growth (%)
EBITDA
EBITDA Margins%
PAT Adj.
Growth (%)
Adj. EPS
Growth (%)

17.4

8.6

19.1

P/E

40.2

37.0

31.1

P/B

12.0

10.0

8.4

EV/EBITDA

33.0

30.4

25.4

ROE (%)

33.2

29.6

29.4

0.0

0.0

0.0

D/E

Valuations
Our target price of Rs322 is based on 35x FY18E EPS.
Over the past two years, the stock has traded between
28-40x one-year forward earnings, whilst its two-year
average is 34x. Our target multiple (35x) is in line with
consensus multiple, given the acceleration in growth
trajectory from FY18 onwards primarily driven by full
impact of better monsoons coupled with enhanced
distribution reach & constant innovation. We forecast a
13.7% EPS growth CAGR for FY16-18E for Dabur.
P/E one year forward

50.0

P/E 1 yr Fwd

Avg 1yr Fwd P/E

Avg + 1 SD

Avg - 1SD

40.0

With a sales growth of just 1.2% YoY in Q1, Dabur

started the current fiscal (FY17) on a sluggish note.
Overall slowdown in consumption space, lack of pricing
growth & heightened competitive intensity is expected
to keep revenue momentum soft in FY17. However, in
FY18, we believe sales to grow by robust 12% on YoY
basis on account of better consumption demand in both
rural (full impact of better monsoons in 2016) and urban
India (implementation of 7th pay commission). Notably,
the revenue growth would be largely driven by
volumes. Moreover, increasing focus of Dabur on
innovative brand offerings would augur well for the
company. Thereby, we expect the top-line of the
company to grow at a CAGR of 8.6% over FY16-18E.
Revenue to pick up momentum from FY18 onwards

30.0

12,000
10,000

20.0
10.0
Sep-11

FY17 to remain soft, revenue to pick up

momentum from FY18 onwards

20.0%
16.3%

8,000

Sep-13

Sep-14

Sep-15

Sep-16

Source: Company, Geojit BNP Paribas Research; *SD-Standard Deviation

Financial Analysis
Volume growth continued to outperform peers
Daburs revenue grew at a robust CAGR of ~19% over
FY09-15 on account of three factors: a) its diverse &
niche product portfolio, b) new product launches and c)
synergies derived from the acquisitions made in
domestic (Fem in FY09) & international markets
(Namaste in FY11, Hobi in FY11). While the past few
years have been difficult for most of the consumer
companies owing to deficient monsoons (affected rural
demand), Dabur managed to maintain its healthy
revenue growth of 11-16% led by volume growth of 712%. However, FY16 was a tough year for the company
(posted sales growth of just 8%) as there was intense
competition
in
health
supplements
(Dabur
Chyawanprash, Dabur Honey) mainly due to entry of
Patanjali. Likewise, foods business reported growth of
mere 2.6% YoY in FY16 led by supply disruptions from
Nepal.

8.0%

4,000
2,000
-

12.3%
10.0%

10.6%

6,000

Sep-12

15.0%

14.7%

5.0%
6,169

7,075

7,827

8,454

8,876

9,967

FY13

FY14

FY15

FY16

FY17E

FY18E

Revenue (Rs.Crore)

5.0%
0.0%

Revenue growth YoY (%)

Note FY17E is not exactly comparable to earlier periods due to adoption of IndAS accounting norms; Source: Company, Geojit BNP Paribas Research

Steady margin improvement on lower input

costs
During FY12-16, EBITDA margin has remained at
elevated levels of 16-18% led by the companys strong
brand equity in the FMCG healthcare portfolio
coupled with benign input cost environment.
Notably, during the period under review, Dabur
reported highest margin of 18% in FY16.

EBITDA margin to improve by 130bps over

FY16-18E
We expect EBITDA margin to further improve to
19.3% by FY18E on account of Daburs continued
focus on the healthcare portfolio. Moreover, Daburs
plan to launch multiple premium offerings (which
enjoy higher realisations) across categories (especially
in the healthcare & skin care) would augur well for
the company. Importantly, Dabur has consistently
shown strength in efficiently managing its input costs
and ad spends in order to sustain the margins.

EBITDA margins to improve to 19.3% by FY18E

RsCr

2,000
1,500

16.0

16.4

16.8

18.0

18.4

19.3

18.0
16.0
14.0

1,000
500

20.0

988

1,160

1,316

1,520

FY13

FY14

FY15

FY16

EBITDA

1,637

1,922

12.0
10.0

FY17E FY18E

Return ratios trend

41.0
39.0
37.0
35.0
33.0
31.0
29.0
27.0
25.0

40.1
34.6

33.4

34.2

34.5

35.3

33.2

FY14

FY15

FY16

FY17E

ROE (%)
Source: Company, Geojit BNP Paribas Research

In FY16, Adj. PAT stood at Rs1,253cr, reporting a

growth of ~18% CAGR over FY12-16. PAT margin
improved by 120bps to 14.8% in FY16. We expect Adj.
PAT to grow at a CAGR of 13.7% with 144bps
improvement in PAT margin over FY16-18E.
PAT margin to expand by 144bps during FY16-18E
1,700

RsCr

1,300
1,100

14.8
12.4

500

1,253

15.3

16.3

18.0

1,620

16.0

1,361

768
FY13

14.0
12.0

1,066

900
700

12.9

13.6

915

10.0
8.0

FY14

Adj. PAT

FY15

FY16

29.4

FY18E

ROCE (%)

Source: Company, Geojit BNP Paribas Research

PAT margins to improve by 144bps

1,500

32.6

32.2
29.6

FY13

EBITDA Margin (%)

38.3

FY17E FY18E

Investment Rationale
A well-diversified portfolio
The product portfolio of Dabur is spread across three
main verticals namely Healthcare comprising health
supplements, digestives and over the counter (OTC)
products, HPC (Home & Personal Care) comprising
skin care, oral care, home care & hair care and Foods.
In FY16, the healthcare, HPC and foods segments
contributed 33%, 49% and ~18% to overall domestic
FMCG revenues, respectively. Given, the diversified
portfolio we believe Dabur would continue to deliver
consistent and profitable performance.
Breakdown of Domestic FMCG business by
vertical

Adj. PAT Margin (%)

Healthcare
(33%)

Source: Company, Geojit BNP Paribas Research

Domestic FMCG

Healthy balance sheet

Dabur has been generating strong operating cash
flows (OCF) over the years. During FY12-16, OCF
has grown at a CAGR of ~15%. As of March16,
Dabur is a net debt free company, with cash & cash
equivalents of Rs2,744crores. Dabur plans to invest
Rs500crores in FY17E mainly towards a new unit
being planned in the north-east (at an outlay of
Rs250crores), which would provide tax benefits.
Notably, working capital is just 3.9% of sales
ensuring strong free cash flow generation. Moreover,
Dabur has track record of steady profit growth, ROE
of over 30% (in last 5 years) and dividend payout in
mid-thirties.

HPC (49%)

Foods (18%)

Source: Company, Geojit BNP Paribas Research

Category-wise sales of Domestic FMCG business

Home Care,
6%

Skin Care, 5%
Hair Care,
23%

Digestives,
6% OTC &
Ethicals, 9%

Health
Supplements,
18%

Oral Care,
15%
Foods, 18%

Source: Company, Geojit BNP Paribas Research

Robust portfolio of brands

The company has a strong portfolio of brands (Dabur
Chyawanprash, Real, Hajmola, Vatika, Amla, Honey,
Dabur Red, Meswak, Fem) with the focus largely on
ayurvedic & healthcare offerings. Currently, Dabur has
16 brands with a turnover of over Rs1bn, and three
brands with turnover of more than Rs10bn. Importantly,
to enhance brand presence, Dabur spends about 13-16%
of its sales on ads every year. Daburs diverse product
portfolio & presence in niche categories has resulted in
sales CAGR of robust ~16% over FY11-16. Further, we
expect revenue to grow at a CAGR of 9% over FY16-18E
due to three key factors: 1) new products in its
innovation pipeline, 2) expansion of distribution
network and 3) revival in rural demand from H2FY17
onwards.

YoY, led by double-digit growth in the toothpaste

portfolio where Red toothpaste and Meswak
continued the strong momentum driven by
consumer advocacy & focused marketing activities.
Commanding
categories

leadership

position

across

most

Continue to build bigger brands

10bn+

1bn+

# - Relative Competitive Position; Source: Company, Geojit BNP Paribas Research

Innovative product offerings to fortify brand

positioning

Source: Company, Geojit BNP Paribas Research

Maintaining leadership position

Owing to its broad-based product portfolio, wellentrenched distribution network & strong brand
equity, Dabur has consistently demonstrated strong
leadership across various categories including
digestives & juices. Dabur has recently launched
Dabur Honey Fruit Spreads in four healthy fruit
variants to grow market share of its honey products.

Dabur has successfully positioned honey as a food

product, thus leading to a market share of over 70%
in the branded honey market. Apart from this, its
products Dabur Chyawanprash and Hajmola are
the largest selling Ayurvedic medicine and
digestive tablets with about 65% market share in
both categories. Notably, Dabur has recently
gained market share in the oral care category with
Daburs Red toothpaste moving from the sixth to
the third slot. In Q1FY17, oral care grew by 11.6%

Over the years, Dabur has launched several

innovative products in the domestic & international
markets. Since its inception, the company has
efficiently leveraged ayurveda & herbal product
offerings to its advantage. On the domestic front,
Dabur introduced seven variants in Chyawanprash
category including Ratnaprash (a premium health
supplement). It also extended the Hajmola brand to
the beverage market with the launch of Hajmola
Yoodley. Similarly, Dabur recently launched Dabur
Honey Fruit Spreads (extension of brand Honey) in
four healthy fruit variants. Interestingly, Real fruit
juices were launched in 1998 and now the company
offers more than 30 variants in the portfolio. Likewise,
in international markets, Dabur introduced new
products such as Dermoviva face care range,
Dermoviva baby wipes, Amla men hair tonic, Vatika
cactus & coconut hair mask.

Enhancing the rural connect

Thrust on innovations
1.

Honey Fruit Spreads

2.

Juices

3.

Chyawanprash

4.

Hair Oil

5.

The company has efficiently expanded its distribution

network in rural India through Project Double. With
the help of this project (rolled out in FY13), Dabur has
almost tripled its rural penetration from 14,865 villages
in FY11 to 44,128 villages in FY15. As a result, the
revenue contribution from the rural areas has increased
from 30% earlier to 45%. Further, the management is
looking forward to extend its rural reach to ~60,000
villages by FY17.

Beneficiary of normal monsoon

Hajmola

Source: Company, Geojit BNP Paribas Research

Premiumisation strategy to play out well

In order to enhance usage of its products, Dabur is
launching premium differentiated offerings across
beverages, health supplements, air care, hair care etc.
For instance, in Chyawanprash category, Ratnaprash is
available at 2x the price of base variant. Likewise, the
newly launched Keratex hair oil is priced at 3x when
compared to Dabur Amla. Similarly, Dabur has
launched new delivery formats in Odonil fresheners
including gel, floral bouquet, spray & pluggy. The
realisation for a pluggy is ~3.5x when compared to
Odonil block. Going forward, we believe premium
portfolio augurs well for the company and it would
help in expanding the margins.
Premiumisation across product categories
Odonil (Rs)
Odonil
Block

40

Toothpaste (Rs/200
gm)

Hair Oils (Rs/100

ml)

Chyawanprash
(Rs/kg)

Babool

42

Dabur
Amla

46

Special
(Immunity
etc.)

295

Gel

80

Dabur Red

88

Vatika
Enriched

56

Fruit
Variants

300

Floral
Bouquet

99

Meswak

90

Dabur
Almond

60

Sugarfree

350

Spray

140

Vatika
Olive

60

Ratnaprash

600

Pluggy

135

Keratex

136
Premium
over base
variant

2x

Premium
over base
variant

3.4x

Premium
over base
variant

2x

Premium
over base
variant

Source: Company, Geojit BNP Paribas Research

3x

While rural sales have been in a slow lane in the past

few years owing to weak monsoons, the rural demand
is expected to improve, going forward on account of
better monsoons coupled with governments focus on
farm sector. The government has recently taken several
initiatives (crop insurance, enhanced allocation for
NREGA in Union Budget) to revive rural demand.
Hence, we expect Dabur to capitalise on a recovery in
rural consumption as a result of strong presence in rural
India (contribution from rural segment is nearly 45%).
Moreover, the implementation of seventh pay
commission (would boost urban demand) & GST (gains
from supply chain efficiency and improving
competitiveness with unorganized players) would bode
well for the company.

Expanding reach in urban areas

In FY15, Dabur launched Project 50-50 wherein it has
strived to focus on top 130 cities in India which together
represent 50% of urban consumption This project
involves segregating the grocery channel teams between
wholesale & retail and focussing marketing activities
and distribution expansion. Similarly, Project CORE
(Chemist Outlets and Range Expansion) was launched
in FY14 to enhance effective coverage of chemist outlets
in 150 focus towns which has further provided impetus
to OTC portfolio. During FY15, the direct reach in
chemist channel rose from 1.72 lakhs to 2.12 lakhs.

Project LEAD to lead the way forward

In FY16, Dabur added another leg to its distribution
enhancement programme with the launch of Project
LEAD (Leveraging through Empowered Anchoring
and Detailing). This is an initiative focused towards
creating a separate front end team for Healthcare (OTC
& Ethicals portfolio) & FMCG and is expected to
enhance the reach of healthcare division of the
company. Under this initiative, Dabur is building
advocacy for its portfolio of OTC & ethical products by

engaging with more than 30,000 healthcare

professionals, both Ayurvedic & Allopathic. About 170
medical representatives (MRs) have already been hired
for detailing the products to doctors and this number is
expected to beef up to 250 by FY17E.
Expansion in distribution
Project Double
Rolled out in FY13 to expand direct coverage in rural markets
Direct Village coverage has increased from 14000 villages in FY11 to
44,000 villages in FY15
Focus on increasing efficiency and productivity of the channel

Project 50-50
Aimed at leveraging the potential of Top 130 towns which contribute to
50% of urban consumption
Segregating the grocery channel teams for wholesale & retail
Initiative is in line with renewed focus on urban markets

Project CORE

To enhance chemist coverage and provide further impetus to our

Health Care portfolio
Direct Chemist Coverage is currently 213,000
Strategy is to increase coverage and range for better throughput

Source: Company, Geojit BNP Paribas Research

Patanjali to help in expanding the herbal market

Dabur, a 132 years old young brand, has efficiently
leveraged ayurveda & herbal product offerings to its
advantage. But, the recent rise of Patanjali Ayurveda
has the potential to impact sales of Dabur, which
competes with Patanjali for nearly 55% of its
domestic revenues. Like Dabur, Patanjali has
presence in similar categories such as Hair Oils,
Toothpaste, Chyawanprash, Shampoo and Honey.
Importantly, the price of Patanjalis products is 1530% lower when compared to products of Dabur.
However, we believe the overall impact on Dabur
would be limited as the promotion of herbal
products by Patanjali will expand the overall market
for ayurvedic products. Moreover, Dabur is well
equipped with its array of brands with high
consumer recall to counter Patanjali. Importantly,
Dabur has a wide distribution network as against
Patanjali, covering over 5.3 million retail outlets with
a high penetration in both urban and rural markets.

To ride the herbal wave

Dabur plans to enhance its range of ayurvedic
products to address emerging healthcare issues. It
has partnered with government body Central
Council of Research in Ayurvedic Sciences (CCRAS)
to collaborate with, develop and commercialise

ayurveda. During FY16, Dabur entered into a license

agreement with CCRAS to commercially produce
two ayurvedic drugs.

International business - 32% of sales

International business division (IBD) includes
Daburs organic overseas business (contributes ~22%
to sales) as well as the acquired entities of Hobi
Group (contributes ~4% to sales) and Namaste
Laboratories (~6% to sales). In FY16, the
international business contributed 32% to the
consolidated revenues. While Asia, US and Africa
each contribute ~17-22% to its international
revenues, Middle East accounts for 33% of its
overseas business.

IBD growth to turn favourable

During FY12-16, the international business grew at a
CAGR of 15%. However, geo-political issues
continue to hurt growth in the Middle East and
North African (MENA) markets. In Q1FY17, SAARC
business recorded healthy 22% YoY growth on the
back of robust show in Nepal (up 27.4%) and Sri
Lanka. Likewise, Hobi reported sales growth of 15%
YoY. However, Namastes sales stood flat YoY
impacted
by
currency
headwinds
(now
stabilized).While the company is completing the
process of localizing the supply chain in its Namaste
geographies in Africa, management plans to
improve margins to high-single digits. We expect
IBD to grow at a CAGR of 9.4% over FY16-18E.
Breakdown of International business
Dabur International (FY16)

Organic Business (70%)

Inorganic Business (30%)

Source: Company, Geojit BNP Paribas Research

Dabur India Ltd: Business overview

Established in 1884, Dabur India Ltd (Dabur) is a world
leader in Ayurveda with a portfolio of over 250
Herbal/Ayurvedic products. It operates in key
consumer products categories viz; hair care, oral care,
health care, skin care, home care and foods. It has 16
brands with a turnover of over Rs1bn. Its products
have a global presence and are today available in over
120 countries. Notably, its brands are highly popular in
the Middle East, SAARC countries, Africa, US, Europe
and Russia. Dabur's overseas revenue accounts for 32%
of the total turnover. Moreover, Dabur has a wide
distribution network, covering over 5.3 million retail
outlets with a high penetration in both urban and rural
markets.
Business Structure
Domestic FMCG (65%)
Domestic
(68%)
Dabur
India Ltd.

Others (3%)
Organic International
(22%)

International
(32%)

Namaste Labs (6%)

Hobi Group (4%)

Source: Company, Geojit BNP Paribas Research

Product portfolio across various categories

Oral Care

Dabur Red, Meswak, Babool

Hair Care

Dabur Amla Hair Oil, Dabur Almond Shampoo

Skin Care

Dabur Gulabari, Fem, Oxy Life

Home Care

Odonil, Odomos, Sanifresh

Health
Supplements
Digestives
OTC &
Ethicals
Foods

Dabur Chyawanprash, Dabur Honey, Dabur

Glucose
Hajmola, Pudin Hara, Nature Care
Dabur Lal Tail, Honitus, Dashmularishta
Real Activ, Real Wellnezz

Source: Company, Geojit BNP Paribas Research

Key Risks:

Weak rural demand

Heightened competitive intensity in some of
its categories.
Steep rise in input costs

Consolidated Financials
Profit & Loss Account

Balance Sheet

Y.E March (Rs cr.)

FY14

FY15

FY16

FY17E

FY18E

Sales
% change
EBITDA
% change
Depreciation
EBIT
Interest
Other Income
PBT
% change
Tax
Tax Rate (%)
Reported PAT
Adj.
Adj. PAT
% change
No. of shares (cr.)
Adj EPS (Rs)
% change
DPS (Rs)

7,075
14.7%
1,160
17.4%
97
1,062
54
128
1,136
19.2%
219
19.3%
914
(1)
915
19.1%
174.4
5.2
7.2%
1.8

7,827
10.6%
1,316
13.5%
115
1,201
40
158
1,319
16.1%
251
19.0%
1,066
1,066
16.5%
175.7
6.1
15.7%
2.0

8,454
8.0%
1,520
15.4%
134
1,386
48
219
1,557
18.0%
302
19.4%
1,253
1,253
17.5%
175.9
7.1
17.4%
2.2

8,876
5.0%
1,637
7.7%
151
1,486
44
251
1,694
8.8%
330
19.5%
1,361
1,361
8.6%
175.9
7.7
8.6%
2.5

9,967
12.3%
1,922
17.5%
170
1,752
44
307
2,016
19.0%
393
19.5%
1,620
1,620
19.1%
175.9
9.2
19.1%
3.0

Y.E March (Rs cr.)

FY14

FY15

FY16

FY17E

FY18E

Cash
Accounts Receivable
Inventories
Other Cur. Assets
Investments
Gross Fixed Assets
Net Fixed Assets
CWIP
Intangible Assets
Def. Tax (Net)
Other Assets
Total Assets
Current Liabilities
Provisions
Debt Funds
Other Liabilities
Equity Capital
Reserves & Surplus
Shareholders Fund
Minority Interest
Total Liabilities
BVPS (Rs)

519
675
973
237
1,076
2,413
1,767
22
(45)
43
5,267
1,603
951
41
174
2,482
2,656
16
5,267
15.3

276
711
973
364
1,813
2,541
1,877
50
(59)
41
6,048
1,668
961
46
176
3,178
3,354
18
6,048
19.2

220
810
1,097
428
2,524
2,780
1,950
45
(77)
48
7,044
2,007
804
51
176
3,984
4,160
22
7,044
23.8

283
850
1,158
444
2,924
3,275
2,294
50
(77)
48
7,974
2,101
804
53
176
4,815
4,991
24
7,974
28.5

378
955
1,277
486
3,724
3,475
2,324
50
(77)
48
9,164
2,290
804
56
176
5,811
5,987
27
9,164
34.2

FY14

FY15

FY16

FY17E

FY18E

16.4
16.8
12.9
38.3
34.6

16.8
17.4
13.6
35.3
34.2

18.0
19.0
14.8
33.2
34.5

18.4
19.6
15.3
29.6
32.2

19.3
20.7
16.3
29.4
32.6

34.7
81.9
67.7
1.9
1.3

32.9
74.7
61.4
1.6
1.1

34.7
80.5
70.0
1.6
1.1

34.7
81.0
70.4
1.8
1.3

34.7
79.9
69.6
2.2
1.6

3.1
1.4
19.6
0.0

3.2
1.4
29.9
0.0

3.2
1.3
28.9
0.0

2.9
1.2
34.0
0.0

2.9
1.2
40.0
0.0

7.1
42.9
54.5
18.7

6.5
38.4
47.1
14.9

5.9
33.0
40.2
12.0

5.6
30.4
37.0
10.0

4.9
25.4
31.1
8.4

Ratios

Cash flow
Y.E March (Rs cr.)

FY14

FY15

FY16

FY17E

FY18E

Pre-tax profit.
Depreciation
Changes in W.C
Others
Tax paid
C.F.O
Capital exp.
Change in inv.
Other invest.CF
C.F - investing
Issue of equity
Issue/repay debt
Dividends paid
Other finance.CF
C.F - Financing
Chg. in cash
Closing cash

1,136
5
82
61
(186)
1,098
(215)
10
98
(107)
0
(491)
(279)
(34)
(804)
187
519

1,319
(2)
(118)
78
(230)
1,047
(267)
(721)
112
(876)
46
(42)
(395)
(26)
(417)
(246)
276

1,557
134
(242)
(89)
(278)
1,083
(217)
(563)
161
(618)
17
58
(422)
(47)
(395)
69
220

1,694
151
(22)
(208)
(330)
1,285
(500)
(400)
251
(649)
(529)
(44)
(573)
63
283

2,016
170
(74)
(264)
(393)
1,456
(200)
(800)
307
(693)
(625)
(44)
(668)
95
378

Y.E March
Profitab. & Return
EBITDA margin (%)
EBIT margin (%)
Net profit mgn.(%)
ROE (%)
ROCE (%)
W.C & Liquidity
Receivables (days)
Inventory (days)
Payables (days)
Current ratio (x)
Quick ratio (x)
Turnover &Levg.
Gross asset T.O (x)
Total asset T.O (x)
Int. covge. ratio (x)
Adj. debt/equity (x)
Valuation ratios
EV/Sales (x)
EV/EBITDA (x)
P/E (x)
P/BV (x)

Recommendation Summary (last 3 years)

Dates

350

22-Sep-16

Rating
BUY

Target
322

300
250
200
150
Sep-13

Mar-14

Sep-14

Mar-15

Sep-15

Mar-16

Sep-16

Source: Company, Geojit BNP Paribas Research

Large Cap Stocks;
Buy
Hold
Reduce

Mid Cap and Small Cap;

Buy
Upside is 15% or more.
Accumulate*
Upside between 10% - 15%.
Hold
Absolute returns between 0% - 10%.
Reduce/Sell
Absolute returns less than 0%.
To satisfy regulatory requirements, we attribute Accumulate as Buy and
Reduce as Sell.
The recommendations are based on 12 month horizon, unless otherwise specified. The investment ratings are on absolute positive/negative return basis. It is
possible that due to volatile price fluctuation in the near to medium term, there could be a temporary mismatch to rating.
* For reasons of valuations/return/lack of clarity/event we may revisit rating at appropriate time. Please note that the stock always carries the risk of being
upgraded to BUY or downgraded to a HOLD, REDUCE or SELL.
-

Upside is 10% or more.

Upside or downside is less than 10%.
Downside is 10% or more.

Geojit BNP Paribas Financial Services Limited has outsourced the preparation of this research report to DION Global Solutions Limited whose relevant
disclosures are available hereunder. However, Geojit BNP Paribas's research desk have reviewed this report for any untrue statement of material fact or any
false or misleading information.

General Disclosures and Disclaimers

CERTIFICATION
I, Rohit Joshi, employee of Dion Global Solutions Limited (Dion) is engaged in preparation of this report and hereby certify that all the views expressed in this
research report (report) reflect my personal views about any or all of the subject issuer or securities.
Disclaimer
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its contents in any manner and the said report, shall in no case, be further distributed to any third party for commercial use, with or without consideration.
Geojit BNP Paribas Financial Services Limited has outsourced the assignment of preparation of this report to Dion.
Recipient shall not further distribute the report to a third party for a commercial consideration as this report is being furnished to the recipient solely for the
purpose of information.
Dion has taken steps to ensure that facts in this report are based on reliable information but cannot testify, nor make any representation or warranty, express
or implied, to the accuracy, contents or data contained within this report. It is hereby confirmed that wherever Dion has employed a rating system in this
report, the rating system has been clearly defined including the time horizon and benchmarks on which the rating is based.
Descriptions of any company or companies or their securities mentioned herein are not intended to be complete and this report is not, and should not be
construed as an offer or solicitation of an offer, to buy or sell any securities or other financial instruments. Dion has not taken any steps to ensure that the
securities referred to in this report are suitable for any particular investor. This report is not to be relied upon in substitution for the exercise of independent
judgment. Opinions or estimates expressed are current opinions as of the original publication date appearing on this report and the information, including
the opinions and estimates contained herein, are subject to change without notice. Dion is under no duty to update this report from time to time.
Dion or its associates including employees engaged in preparation of this report and its directors do not take any responsibility, financial or otherwise, of
the losses or the damages sustained due to the investments made or any action taken on basis of this report, including but not restricted to, fluctuation in the
prices of securities, changes in the currency rates, diminution in the NAVs, reduction in the dividend or income, etc.
The investments or services contained or referred to in this report may not be suitable for all equally and it is recommended that an independent investment
advisor be consulted. In addition, nothing in this report constitutes investment, legal, accounting or tax advice or a representation that any investment or
strategy is suitable or appropriate to individual circumstances or otherwise constitutes a personal recommendation of Dion.

REGULATORY DISCLOSURES:
Dion is engaged in the business of developing software solutions for the global financial services industry across the entire transaction lifecycle and interalia provides research and information services essential for business intelligence to global companies and financial institutions. Dion is listed on BSE
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In the context of the SEBI Regulations, we affirm that we are a SEBI registered Research Analyst and in the course of our business, we issue research reports
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In compliance with the above mentioned SEBI Regulations, the following additional disclosures are also provided which may be considered by the reader
before making an investment decision:
1. Disclosures regarding Ownership
Dion confirms that:
(i)

It/its associates have no financial interest or any other material conflict in relation to the subject company (ies) covered herein at the time of
publication of this report.

(ii) It/its associates have no actual / beneficial ownership of 1% or more securities of the subject company (ies) covered herein at the end of the
month immediately preceding the date of publication of this report.
Further, the Research Analyst confirms that:
(i) He, his associates and his relatives have no financial interest in the subject company (ies) covered herein, and they have no other material conflict
in the subject company at the time of publication of this report.
(ii) He, his associates and his relatives have no actual/beneficial ownership of 1% or more securities of the subject company (ies) covered herein at the
end of the month immediately preceding the date of publication of this report.
2. Disclosures regarding Compensation:
During the past 12 months, Dion or its Associates:
(a) Have not managed or co-managed public offering of securities for the subject company (b) Have not received any compensation for investment banking
or merchant banking or brokerage services from the subject company (c) Have not received any compensation for products or services other than
investment banking or merchant banking or brokerage services from the subject. (d) Have not received any compensation or other benefits from the subject
company or third party in connection with this report
3. Disclosure regarding the Research Analysts connection with the subject company:
It is affirmed that I, Rohit Joshi employed as Research Analyst by Dion and engaged in the preparation of this report have not served as an officer, director
or employee of the subject company
4. Disclosure regarding Market Making activity:
Neither Dion /its Research Analysts have engaged in market making activities for the subject company.

Copyright in this report vests exclusively with Dion.

ROHIT
JOSHI

Digitally signed by ROHIT JOSHI

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JOSHI,
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PRADESH
Date: 2016.09.22 17:37:04 +05'30'

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