Sector Note

DOLAT CAPITAL

Dissecting

India Research

FMCG Valuations

Sr. Analyst: Amit Purohit

Tel : +9122 4096 9724
E-mail: amitp@dolatcapital.com

October 4, 2013

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DOLAT CAPITAL

October 4, 2013

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Its operating performance!!
FMCG stocks have been amongst the best performing over the last three
years with FMCG index outperforming Sensex by 102% during period. This
massive outperformance, has of late, raised concerns on the sustainability,
given the multiples for some of the stocks are now high and the recent
near term slowdown in FMCG has added fuel to the overall argument.
Hence the question what is sustaining such high P/E multiples despite
near term slowdown across categories.
This note makes an attempt to understand the key levers that are driving
valuations for the consumer staple companies. For our study, we have
taken their performance of the last fifteen years. There is nothing sacrosanct
about this number, we must say! It is only reflective of four phases, and
hence helps us to normalise our inferences. Our key parameters for this
exercise revolve around:
1) Financial performance,
2) Stock performance and
3) Valuations.
We may ofcourse mention here that there are also the famous nonfundamental factors (read TINA) that have resulted into higher valuation
for FMCG companies et al. However, we do believe that these may be at
best add on factors and more for tactical allocations.
We agree that sustainable volume growth is critical for a business
perspective. However, near term slowdown in volumes is unlikely to result
in P/E derating. Our analysis confirms that the markets have also never
given a thumbs up to a strong volume growth achieved at an expense of
deteriorating operating performance. However, muted volume growth with
better operating performance has however managed to award higher P/E
multiples.

Methodology
We have divided the 15 year period into four different phases for our
analysis. The division of various phases factors-in a different industry
scenario and the impact on the companys performance and valuations.
We have selected five FMCG stocks (HUL, Colgate, Dabur, Marico and
ITC) for our study. We have tried to understand, how the strategy of different
companies have evolved and analysed their behaviour during different
phases in last 15 years. Their action/strategy had an implication on the
financial parameter, valuations and stock returns.

October 4, 2013

Executive Summary

DOLAT CAPITAL

Our Analysis
Are P/E multiples high?
P/E multiplies of all the FMCG companies have witnessed a significant
expansion in the recent past. However, we believe that comparison of
current P/E multiples with near term (read 5-6 years) average P/E for FMCG
companies may not be relevant. We have therefore taken a period of 15
years starting 1998 to get a better comparison and understanding. During
1998-2002, P/E multiple of several FMCG companies were even higher
than the current P/E multiples.
What has been the drivers of P/E multiples?
Our analysis suggests that P/E multiples of FMCG companies are driven
more by Operating Performance rather than by Volume Growth. Companies
with strong operating performance namely Dabur and Marico has
outperformed Sensex even during Phase II (FY03-07) which witnessed
an underpeformance of FMCG Index. HULs average P/E multiple during
1998-2002 stood at 35x even though volume growth remained muted
growth during this period
Current Phase (FY13-16E) looks similar to Phase I 1998-2002
We believe that Phase V (FY13-16E) is likely to be a repeat of Phase I,
volume growth has been slowing down and is expected to remain muted.
Similar scenario was witnessed during Phase I. However, in Phase V a
good monsoon may provide some respite to the deteriorating volume
growth. Consensus also is building in an improvement in operating margins
and performance on account of benign raw material cost. Our inference
will be wrong if we are in the 2003-2005 like period where operating
performance was muted.
Vulnerable categories which can impact operating performance
Since operating performance is critical for sustenance of P/E multiples,
we have identified key categories which are most vulnerable due to
destructive competition. Historically, deterioration in the operating matrix
of any categories has resulted in a P/E de-rating (HUL 2004). The three
categories which are most vulnerable are 1) Oral care (High), 2) Skin
care (Medium) and Hair Oil (low).
Negative on Colgate; Positive on ITC and expect HUL range bound
Colgate - We believe Colgate is most vulnerable and has a limited scope
for strong operating performance due to increase in competitive intensity.
We have a target of `1100 (25x FY15E)
HUL - While volume growth remains muted for HUL, the operating
performance continue to remain strong. Our price range of HUL is Rs580650.
ITC - Sustenance of maintaining a 17-18% operating profit CAGR will
ensure high P/E multiple. We have a target of ` 350.
October 4, 2013

DOLAT CAPITAL
Summarized Observations
Phase I: FY98-02 Muted volume growth but better operating
performance
Industry: Volume growth remained muted during this period. Slowdown
was witnessed in the rural markets. However, the competitive intensity
was low. Companies undertook several changes in their strategy during
this phase with a focus on improving margins and return ratios.
Premiumisation was witnessed in select categories (Detergent).
Valuation: Despite overall slowdown in the volume growth the P/E multiples
of FMCG companies remained high. However, P/E multiple had a downward
trend during this phase as competitive intensity begin to increase in the
last year of the phase due to sustained slowdown in volumes.
Stock performance v/s Sensex: During this phase HUL and Dabur
outperformed Sensex with a return of 50% and 92% respectively. This
was primarily driven by strong operating performance; EBITDA CAGR HUL - 17.6% and Dabur - 14%. Revenue CAGR remained muted for HUL
and Dabur at 1.2% and 10% respectively. Colgate underperformance was
on back of a 1.7% CAGR in EBITDA.
Phase I : Stock performance v/s Sensex

Dabur and HUL

outperformed Sensex driven
by strong operating
performance

October 4, 2013

DOLAT CAPITAL
Phase II : FY03-07 Improvement in volume growth but muted
operating performance
Industry: This phase witnessed a trend reversal whereby volumes begin
to improve from FY05. However, competitive intensity remained high during
FY03-05 and focus of companies was towards volume growth. Sustained
slowdown in the FMCG sector for several years triggered the price war in
almost all categories. The prominent one being Soaps, Detergent,
Shampoo and Oral care. Later part of the phase did witness easing of
competition/price war and volume also improved.
Valuation: Despite higher volume growth over Phase I, the P/E multiple
of all the FMCG companies got de-rated mainly due to increased
competitive intensity which impacted the operating performance of the
companies.
Stock performance v/s Sensex: Both Dabur and Marico out performed
Sensex. This is despite the fact that the overall FMCG Index
underperformed to Sensex by 220% during this phase. HUL under
performed despite improvement in volumes as EBITDA CAGR remained
muted at 1.5%. For Dabur and Marico, EBITDA CAGR stood at 22% and
28% respectively.
Phase II : Stock performance v/s Sensex

Marico and Dabur

outperformed Sensex driven
by strong operating
performance.

October 4, 2013

DOLAT CAPITAL
Phase III : FY08-10 Both volume growth and operating performance
improves
Industry: During this phase FMCG industry regained its pricing power and
competition rationalised. The sector also witness improvement in volumes.
This led to an overall improvement in operating performance. Increase in
raw material price did has some impact on the operating performance
however, companies were able to pass on the increase.
Valuation: The P/E multiple which had de-rated during Phase II began to
re-rate as the operating performance of the companies improved.
Stock performance v/s Sensex: All FMCG stock outperformed Sensex
during this phase. Colgate was the best performing stock with 106% return
as operating profit CAGR for the company during this phase was 30%.

Phase III : Stock performance v/s Sensex

All FMCG companies

outperformed Sensex.
Colgate outperformed on
back of strong operating
performance.

October 4, 2013

DOLAT CAPITAL
Phase IV: FY11-13 - Sustained volume growth and operating
performance
Industry: This has been the best phase for all FMCG companies. Volume
continued to improve and consumer up-trade was visible across categories.
Companies also introduced several premium products to address the
changing aspiration of the consumer. Competition remained rational during
this phase with an exception to Shampoo category.
Valuation: The P/E multiple witnessed a significant re-rating. In most of
the companies the P/E multiple has reached the high multiples of Phase I.
Stock performance v/s Sensex: All FMCG stock outperformance Sensex
during this phase. FMCG Index during this phase also outperformed the
market by 102%. HUL was a best performing stock in this phase driven by
strong operating performance with EBITDA CAGR of 22%.

Phase IV : Stock performance v/s Sensex

All FMCG companies

outperformed Sensex. HUL
has been the best
performing stock during this
phase.

October 4, 2013

DOLAT CAPITAL
Phase V: FY13-16E, a likely repeat of Phase I
We believe that Phase V (FY13-15E) is likely to be a repeat of Phase I,
volumes growth has been slowing down and is expected to remain muted.
Similar scenario was witnessed during Phase I. However, in Phase V a
good monsoon may provide some respite to the deteriorating volume
growth as rural demand would remain strong.
Operating performance during Phase I was driven by premiumization in
select categories (Detergent), change in strategy (HUL focus on power
brands, Dabur on high margin products) and low raw material cost (Copra
price declined - Marico). During Phase V, we expect the margin expansion
may sustain on back of benign raw material cost.
Hence, we believe that the key variable to look out going forward is not the
volume growth but the sustenance of operating performance. We do
appreciate the fact that sustained deterioration in the volumes for few
years is a big negative (as been witnessed in Phase II (FY03-05) impact
of drought and sustain slowdown in FMCG) as it puts pressure on
companies to take pricing action, and hence impact the operating
performance.
As long as the operating performance of the companies do not deteriorate
the P/E multiples are unlikely to witness sharp correction. We would
probably be in the Phase I scenario where in FMCG index and stock did
outperform the Nifty.
However, increased competitive intensity in few of the categories could
result in a deterioration of operating performance and put those companies
at risk of P/E de-rating. We have made an attempt to list down few. These
categories are currently small, however, they enjoy strong margins.
Oral care: P&Gs entry, we believe increases a risk of decline in categories
margins. This could be due to decline in realisation (price war) or higher
advertising spend. The last time the category witnessed a price action
was in FY04 when Colgate took a price reduction of 17% on 65% of its
portfolio due to sharp slowdown in categories and increased competition.
Skin care: The category has grown significant in the last few years driven
by rising aspiration and launch of new products. Further, the margins in
this category are very high led by premiumisation. Although it is still a low
penetrated category, it could witness some price action by a marginal player
which can disrupt the category business dynamic.
Hair Oil: A well penetrated category is witnessing entry of MNCs. While
the MNCs are focusing on the premium segment (Dove Elixir), there is a
possibility of increased competition within this category which is dominated
by a domestic FMCG and forms a significant portion of most of the domestic
companies (Marico, Dabur and Bajaj Corp).

October 4, 2013

DOLAT CAPITAL
Categories

Industry
`bn)
Size (`

Growth
rate (%)

Gross
margin(%)

Oral Care

80

12-15%

Skin care

50

Hair Oil

73

October 4, 2013

Competitive Penetration
intensity

Major Companies Remark

(% of sales)

60%

High

Medium

15-20%

70%

Medium

Low

Colgate - 90%,
HUL - 5%,
Dabur - 9%
HUL - 10%,
Emami - 12%

12-15%

55%

Low

High

Dominated by MNC.
Now P&G marks its
entry
Dominated by MNC
with some niche
segment held by
domestic
Bajaj Corp -100%, Dominated by
Marico - 68%,
Domestic. Now MNC
Dabur - 14%
has made an entry

10

DOLAT CAPITAL

ITC (CMP: ` 341, Mkt Cap USD 42bn)

Phases
Net Sales CAGR
Vol CAGR
Price CAGR
EBITDA CAGR
EBITDA margin
PAT CAGR
PE
Return

I (4 yrs)
II (5 yrs)
1998-2002 2003-2007
11.8%
-2.7%
14.5%
18.8%
32.0%
22.7%
27
-19%

17.7%
6.4%
11.3%
10.6%
36.0%
19.0%
14
191%

III (2 yrs) IV (2 yrs) V (3 yrs)

FY08-10 FY11-13 FY13-16E
14.1%
2.0%
12.1%
19.7%
33.0%
14.1%
21
69%

18.3%
3.9%
14.4%
19.8%
35.5%
22.0%
22
78%

Bloomberg Consensus estimate

FY14E
FY15E

FY16E

19.7%

Net Sales

362,622 424,519 494,244

19.0%
36.4%
19.0%

EBITDA
margin %
PAT
EPS
P/E

129,879 154,090 180,378

35.8%
36.3%
36.5%
89,489 106,580 124,594
11.3
13.4
15.6
30
25
21

Phase I volume declined but operating CAGR very strong resulting

in a high P/E but lower returns
1. The margin expansion during this phase was mainly led by change
in mix of the cigarette volumes. Share of regular filter cigarette
during this period increased from 45% to 56% as Micros and
Plain cigarette witnessed a sharp decline in volumes.
Phase II volume growth improved, operating growth slowdown and
P/E multiple also declined
1. Volume growth improved during this phase however, operating
performance remained muted as there was no increase in excise
duty which resulted in no significant price increase in the cigarette
business.
Phase III Muted volume growth, operating performance improves
and P/E multiple increases
1. This phase saw discontinuation of Micros and Plain cigarette as
excise duty witnessed a sharp increase. Strong pricing power
enabled the company to take price increase which resulted in a
margins expansion.
2. The phase marked a change in the factor which was driving the
stock performance in ITC. From volume growth the focus shifted
to operating growth and investors started appreciating the strong
pricing power enjoyed by ITC.
Phase IV Muted volume growth, operating performance improves
and P/E multiple increases
1. The phase witnessed highest increase in excise duty with a
cumulative increase of 39%. Strong pricing power enabled the
company to take price increase which resulted in a margins
expansion.
2. Muted volume growth but strong operating performance led to a
high P/E multiples and stock return during this phase 78%.

October 4, 2013

11

DOLAT CAPITAL
P/E, EBITDA and Stock performance (Base Year 1st year of every phase)

October 4, 2013

12

DOLAT CAPITAL

Hindustan Unilever (CMP: ` 611, Mkt Cap USD 21bn)

Phases
Net Sales CAGR
Vol CAGR
Price CAGR
EBITDA CAGR
EBITDA margin
PAT CAGR
PE
Stock Return

I (4 yrs)
II (5 yrs)
1998-2002 2003-2008
1.2%
1.0%
0.2%
17.6%
14.5%
24.2%
35
50.0%

III (2 yrs) IV (2 yrs) V (3 yrs)

FY08-10 FY11-13 FY13-16E

10.0%
6.0%
4.0%
1.5%
13.9%
0.2%
25
-5%

10.7%
4.0%
6.7%
12.9%
14.8%
7.7%
26
25%

14.4%
7.9%
6.5%
21.8%
15.3%
23.4%
29
100%

Bloomberg Consensus estimate

FY14E
FY15E

12.1%

Net Sales

14.0%
16.0%
10.7%

EBITDA
margin %
PAT
EPS
P/E

FY16E

285,128 322,959 362,235

45,115
15.8%
36,097
16.7
36

51,820
16.0%
40,078
18.6
33

58,933
16.3%
44,085
20.4
30

Phase I Volume growth muted but strong operating performance

High P/E multiple
1. HUL was focusing more on power brands and sustained profitable
growth.
2. Soaps and Detergent (S&D) witnessed consumer up-trading.
3. Despite muted volume growth P/E multiples and stock
performance remained strong.
Phase II improvement in volumes, operating performance
deteriorates low P/E and returns
1.

This phase has witnessed improvement in volumes while the

operating performance deteriorated due to heightened competition
in the Soaps and Detergent Category.

2.

Improved volume growth but muted EBITDA growth P/E multiples

declined.

Phase III Volumes growth slows down but operating performance

improves Improvement P/E
1. During this phase the focus of the company was more on operating
profit improvement as company passed on the increase in raw
material cost. This strategy result in a volume market share loss
for the company across all categories.
2. Improvement in operating performance and muted volume growth
resulted in a marginal expansion of P/E multiples and stock return
was positive.
Phase IV Best phase in the last decade for HUL - P/E expansion
1. Volume growth improved and also the sharp improvement in
operating performance. Increased focus towards high margin
personal care category, Consumer up-gradation and lower
competition in the Soaps and Detergent Category.

October 4, 2013

13

DOLAT CAPITAL
P/E, EBITDA and Stock performance (Base Year 1st year of every phase)

October 4, 2013

14

DOLAT CAPITAL

Dabur India (CMP: ` 170, Mkt Cap USD 4.6bn)

Phases
Net Sales CAGR
Vol CAGR
Price CAGR
EBITDA CAGR
EBITDA margin
PAT CAGR
PE
Stock Return

I (4 yrs)
II (5 yrs)
1998-2002 2003-2007
10.7%

12.0%

14.2%
10.0%
8.7%
24
92%

22.1%
14.2%
33.7%
16
371%

III (2 yrs) IV (2 yrs) V (3 yrs)

FY08-10 FY11-13 FY13-16E
19.8%
13.0%
6.8%
24.3%
17.4%
22.6%
24
75%

23.0%
11.0%
12.0%
15.1%
17.2%
16.4%
26
69%

Bloomberg Consensus estimate

FY14E
FY15E

FY16E

15.5%

Net Sales

71,087

82,009

94094

17.0%
17.3%
19.0%

EBITDA
margin %
PAT
EPS
P/E

12,173
17.1%
9,279
5.3
32

14,253
17.4%
11,014
6.3
27

16426
17.5%
12895
7.4
23

Phase I Revenue growth muted but operating profit improves - High

P/E multiple
1. Operating performance was ahead of revenue growth as company
focus on high margin products and rationalised distributor margin
and reduced pipeline inventory.
Phase II Revenue growth remains muted but operating profit
continue to improves - P/E multiple contracts
1. The major part of this phase has witnessed a slowdown and
increase competitive intensity.
2. Operating margin improved mainly due to demerger of Pharma
business and Acquisition of Balsara which took place in the latter
part of the phase.
Phase III Strong revenue growth on backed by volumes. Significant
increase in operating margins. P/E multiple expand
1. Strong revenue growth mainly driven by volumes. Double digit
growth in volumes was witnessed during this phase.
2. Competitive intensity that remained high in major part of Phase
II, however begun to ease as companies were able to pass on the
RM cost increases and rising income levels improved affordability.
3. Operating margin improved significantly during this phase mainly
on account of premiumisation and benign competitive intensity.
Phase IV Strong revenue growth but operating performance
remained muted - High P/E multiple
1. Strong revenue growth was largely backed by acquisition. Volume
growth remained strong at double digits.
2. Operating performance impacted due to increased focus of
company towards volumes. Further, categories like Shampoo
witnessed severe competition.

October 4, 2013

15

DOLAT CAPITAL
P/E, EBITDA and Stock performance (Base Year 1st year of every phase)

October 4, 2013

16

DOLAT CAPITAL

Colgate-Palmolive (CMP: ` 1276, Mkt Cap USD 2.7bn)

Phases
Net Sales CAGR
Vol CAGR
Price CAGR
EBITDA CAGR
EBITDA margin
PAT CAGR
PE
Stock Return

I (4 yrs)
II (5 yrs)
1998-2002 2003-2007
3.5%
2.5%
1.0%
1.7%
9.8%
8.8%
46
-52%

8.1%
5%
3%
6.9%
16.5%
16.0%
21
93%

III (2 yrs) IV (2 yrs) V (3 yrs)

FY08-10 FY11-13 FY13-16E
15.4%
12%
3%
30.6%
21.9%
33.0%
18
106%

17.6%
13%
5%
8.5%
21.4%
7.3%
25
70%

Bloomberg Consensus estimate

FY14E
FY15E

FY16E

14.7%

Net Sales

36,092

41,731

47,841

15.2%
20.7%
13.8%

EBITDA
margin %
PAT
EPS
P/E

7,332
20.3%
5,601
41.2
31

8,610
20.6%
6,419
47.3
27

10,056
21.0%
7,329
54.0
24

Phase I Revenue growth muted and so was operating profit growth.

Lower profit resulted in High P/E multiple
1. During this Phase the company focused on increasing the market
penetration of its products and kept high ad spends. Volume
growth remained muted.
2. P/E multiple during this phase were in a declining trend and high
P/E multiple was more a function of poor earnings growth.
Phase II Revenue growth and operating performance improved Reduction in P/E multiple
1. P/E multiple which remained high in Phase I witnessed a sharp
correction as operating performance improved.
2. Operating performance improved mainly due to reduction in
advertising spend. While P/E multiples declined the stock return
during this phase stood at 151%.
Phase III Strong revenue growth and operating performance Reduction in P/E multiple
1. The de-rating trend continued as P/E multiple further declined
despite strong performance.
2. Operating performance improved mainly due to lower advertising
spend and strong revenue growth.
Phase IV Strong revenue growth but muted operating performance
Increase in P/E multiple
1. The de-rating trend which continued till phase III saw a trend
reversal with sharp increase in P/E multiples. This was despite
poor performance at the operating level.
2. Operating performance remain muted on account of increase
advertising spends.

October 4, 2013

17

DOLAT CAPITAL
P/E, EBITDA and Stock performance (Base Year 1st year of every phase)

October 4, 2013

18

DOLAT CAPITAL

Marico (CMP: ` 212, Mkt Cap USD 2bn)

Phases
Net Sales CAGR
Vol CAGR
Price CAGR
EBITDA CAGR
EBITDA margin
PAT CAGR
PE
Stock Return

I (4 yrs)
II (5 yrs)
1998-2002 2003-2007
9.2%
10.6%
-1.4%
13.5%
9.3%
13.6%
11
3%

35%
9%
26.0%
27.8%
10.9%
15.2%
15
721%

III (2 yrs) IV (2 yrs) V (3 yrs)

FY08-10 FY11-13 FY13-16E
18%
14%
4.2%
23%
12.3%
23%
20
77%

21%
14%
7.2%
24%
12.9%
19%
27
88%

Bloomberg Consensus estimate

FY14E
FY15E

FY16E

14.3%

Net Sales

51,000

58,991

67724

17.0%
14.6%
22.0%

EBITDA
margin %
PAT
EPS
P/E

7,331
14.4%
4,715
7.3
29

8,588
14.6%
5,596
8.7
25

10068
14.9%
6658
10.3
21

Phase I Revenue growth muted and so was operating profit growth.

Lower profit resulted in High P/E multiple
1. Realisation de-grew as copra prices continued to decline during
this phase and company passed on the benefit of the decline in
RM cost.
2. Company continued to increase spend on advertisement and
much of the gross margin expansion was passed on to improve
the penetration of its brands.
Phase II Revenue growth and operating performance improved
Expansion in P/E multiple
1. Strong revenue growth mainly led by Parachute, its variants and
value added Hair Oil. Acquisition also resulted in a sharp increase
in revenue in the latter part of the phase.
2. Operating performance improved mainly due to increase focus
on improving the profitability of refined edible oil segment and
increase share of high margin products. High margin products
share in the total sales increased by 10% to 76% of sales.
Phase III Strong revenue growth backed by volumes and
improvement in operating performance - P/E multiple continues to
expand
1. Raw material prices witnessed volatility but strong brands enables
the company to pass on the cost increases and benefit from lower
RM cost in the last year of this phase.
Phase IV Strong revenue growth and operating performance P/E
multiple
1. Operating performance continued its growth momentum. Lower
Ad spend did contributed to the improvement in margins.

October 4, 2013

19

DOLAT CAPITAL
P/E, EBITDA and Stock performance (Base Year 1st year of every phase)

October 4, 2013

20

October 4, 2013

9.00%

35,192

9.20%

38,436

FY00

0.00%

5,262

29.7

30

-0.60%

18%

6192.4

13%

30.7
26%

40.4

27%

27

-2.40%

18%

26

18

0.50% -8.40%

28%

11,914

13%

37.9

19,112

9.20% 20.10%

7845.1 10077.4

25%

35.1

FY02

41,964 50,393

FY01

9,584 10797.7 13502.2 16963.4

32,298

FY99

14

4.20%

13%

13,461

38%

41.8

26,462

25.70%

63,352

FY03

11

3.10%

20%

16,194

-6%

37.8

24,835

3.60%

65,644

FY04

12

7.10%

16%

18,865

18%

37.7

29,307

18.40%

77,745

FY05

P/E

Price grth

Vol grth

growth (%)

PAT

growth (%)

0.70%

7,218

10.8

38

5.50%

1.50%

46.70%

10,590

21%

12.2

7.00%

12,401

10,212

EBITDA

margin (%)

2000

2001

3.50%

15,484

14%

15.8

17,297

40

0.60%

3.90%

35

-0.20%

3.70%

2003

2004

2005

FY07

FY08

FY09

FY10

FY11

FY12

FY13

2006

FY09

21

-2.90%

12%

32636

15%

32.5

50724

FY10

19

7.20%

12%

40610

25%

34.8

63191

11.90% 16.30%

FY08

23

-0.70%

16%

31,201

11%

31.6

44,113

14.70%

2008

19

7.10%

15%

27,000

15%

32.6

39,638

22.90%

2007

13

8.40%

24%

23,405

17%

34.7

34,378

27.30%

61296

19%

35.6

74249

21%

35.9

88236 106341

FY11

19

-2.80%

FY12

22

6.20%

FY13

23

1.60%

22.80% 22.90% 21.10%

49875

17%

35

74126

16.60% 17.20% 19.40%

98,956 1,21,643 1,39,475 1,56,119 1,81,532 211,675 247,984 296,056

FY06

17,173

13%

19.6

19,558

-9.30%

24

-5.30% -9.60%

-4.00% 11.40%
27

11,846

-27%

14.5

14,374

-2.10%

25

-3.10%

1.00%

2.30% -32.60%

17,567

1%

19.5

19,767

1.80%

9.40%

15,397

14%

13.6

16,481

17,691

14%

13.7

18,857

25

0.10%

11.30%

24

1.50%

8.00%

6%
30

24

10.00% 13.20%

3.40%

11.20%

19666

13%

13

21280

13.30% 19.20%

10.60% 17.50% 14.90%

13,105

0%

13

14,433

11.40%

3.30%

15.20%

20449

18%

15.4

25,551

15.70%

24

26

-5.60% 12.40%

5.60%

17,744

15.1

21,588

27

1.20%

26607

22%

14.9

32914

32843

22%

15.5

40038

25

0.80%

26

3.10%

9.00%

31

9.70%

7.00%

4.70% 23.40% 23.40%

21563

-2%

13.7

26993

4.80% 11.80%

0.70%

20587

8%

15.7

27,500

6.00% 12.60% 12.10% 16.70%

99,549 1,01,384 99,269 1,10,605 1,21,034 1,37,178 1,63,452 1,42,960 1,65,396 175,238 1,97,352 221,164 258,102

2002

23.80% 18.10% 10.90%

13,113

22%

14.3

15,166

4.50%

94,818 1,01,425 1,06,037 1,09,718

1999

growth (%)

Net Sales

1998

Hindustan Unilever (CMP: ` 611, Mkt Cap USD 21bn)

P/E

Cig Vol growth

growth (%)

PAT

growth (%)

margin (%)

EBITDA

growth (%)

Net Sales

FY98

ITC (CMP: ` 341, Mkt Cap USD 42bn)

Annexure

DOLAT CAPITAL

21

October 4, 2013

12.70%

9,148

433

9.6

17

15.50%

500

3.50%

8.8

FY02

11,071 12,203

FY01

10.6

10.8

1320

34

54.50%

773

605

28

25

3.20% -24.00%

796.9

16.50% 26.00% 12.00%

9.3

1178.3

9.40% 10.70% 10.20%

10,004

FY00

775.4 802.352 935.137

8,114

FY99

1052

0.50%

12.3

1553

-2.60%

12,642

FY04

15

15

42.20% 22.20%

861

17.10%

11.9

1545

6.30%

12,974

FY03

14

45.60%

1532

33.50%

13.9

2072

18.20%

14,942

FY05

P/E

Volume growth

growth (%)

PAT

growth (%)

margin (%)

EBITDA

growth (%)

Net Sales

-3%

437

10.70%

1,043

9,718

FY98

60

6%

-4.60%

417

-16.40%

9.10%

872

-1.70%

9,553

FY99

55

7%

24.30%

518

17.70%

9.60%

1,027

12.40%

10,737

FY00
11,131

FY02
9,474

FY03

1,117

612

3.40%

39

2%
29

-2%

6.60% 11.00%

552

5.30%

9.60% 10.00%

1,081

1,568

-0.90%

9,392

FY04

1,080

6.40%

19

-3.50%
17.5

-4.00%

44.70% 21.90%

886

31.90%

15.60% 16.70%

1,474

4.60% -0.80% -14.90%

11,227

FY01

16.5

10%

4.90%

1,133

12.50%

18.30%

1,764

2.70%

9,642

FY05

18,659

FY06

24

10%

21.40%

1,376

12.40%

17.60%

1,983

16.60%

11,242

FY06

20

45.90%

2235

32.10%

14.7

2737

24.90%

Colgate-Palmolive (CMP: ` 1276, Mkt Cap USD 2.7bn)

P/E

Volume growth

growth (%)

PAT

growth (%)

margin (%)

EBITDA

growth (%)

Net Sales

FY98

Dabur India (CMP: ` 170, Mkt Cap USD 4.6bn)

26

10%

16.40%

1,602

-2.90%

14.90%

1,926

15.20%

12,951

FY07

28

22.90%

2747

25.40%

16.8

3433

9.50%

20,431

FY07

19

8.00%

44.70%

2,317

51.60%

19.80%

2,919

13.80%

14,734

FY08

26

13%

18.80%

3263

17.60%

17.1

4037

15.60%

23,611

FY08

FY10

18.4

6232

4904

FY10

23

15%

4,982

4098

20

15

13.00% 13.00%

25.20% 41.20%

2,902

15.60% 47.60%

19.90% 25.40%

3,376

15.00% 15.80%

16,948 19,625

FY09

19

12%

14.20% 31.60%

3725

15.50% 33.70%

16.6

4661

18.80% 20.90%

28,054 33,914

FY09

FY12

61,761

FY13

16.8

8902

16.6

10251

6402

7579

FY12

26

10%

31,638

FY13

25

11%

5785

6568

4485

4967

21

26

28

12.50% 14.00% 10.00%

-1.80% 11.40% 10.70%

4026

3.30% 12.40% 13.50%

22.50% 21.50% 20.80%

5146

16.50% 17.80% 17.50%

22,861 26,932

FY11

29

12%

14.10% 14.40% 18.40%

5598

24.10% 15.10% 15.20%

19

7736

20.30% 30.10% 16.40%

40,794 53,054

FY11

DOLAT CAPITAL

22

October 4, 2013

P/E

10

13.30%

Volume growth

15%

25.00%

375

growth (%)

13%

300

9.3

PAT

9.2

margin (%)

510

12.50%

5,512

FY99

growth (%)

450

4,900

EBITDA

growth (%)

Net Sales

FY98

458

20%

8.9

599

3.50%

6,707

FY01

14

9%
17

18%

-0.10% 22.20%

374.6

-2%

7.7

500

17.60%

6,480

FY00

3%

9.20%

500

25%

10.8

748

3.70%

6,957

FY02
8,937

FY04

621

6%

8.9

793

-10%
9

5.00%

12.10% 10.80%

561

0%

9.6

745

11.30% 15.40%

7,743

FY03

Marico (CMP: ` 212, Mkt Cap USD 2bn)

10

9%

11.00%

690

11%

8.8

883

12.70%

10,070

FY05

12

9%

26.10%

870

63%

12.6

1443

13.60%

11,439

FY06

19

15%

13.70%

989

38%

12.8

1987

36.10%

15,569

FY07

24

15%

60.30%

1585

24%

12.9

2463

22.40%

19,050

FY08

FY10

2414

23%

14.1

3751

17

12%

21

14%

28.60% 18.40%

2038

23%

12.7

3041

25.40% 11.40%

23,884 26,608

FY09

FY12

45,961

FY13

3188

18%

12.1

4844

3626

29%

13.6

6251

25

12%

27

17%

28

12%

5.20% 25.50% 13.70%

2540

9%

13.1

4097

17.60% 28.10% 14.70%

31,283 40,083

FY11

DOLAT CAPITAL

23

DOLAT CAPITAL
BUY

Upside above 20%

ACCUMULATE

Upside above 5% and up to 20%

REDUCE

Upside of upto 5% or downside of upto 15%

SELL

Downside of more than 15%

Analyst

Sector/Industry/Coverage

E-mail

Tel.+91-22-4096 9700

Amit Khurana, CFA

Amit Purohit
Milind Bhangale
Nehal Shah
Priyank Chandra
Rahul Jain
Rajiv Pathak
Prachi Save

Co-Head Equities and Head of Research

Consumer
Pharma
Midcaps & Agrochem
Oil & Gas
IT Services
Financials
Derivatives

amit@dolatcapital.com
amitp@dolatcapital.com
milindb@dolatcapital.com
nehals@dolatcapital.com
priyank@dolatcapital.com
rahul@dolatcapital.com
rajiv@dolatcapital.com
prachi@dolatcapital.com

Associates

Sector/Industry/Coverage

E-mail

Afshan Sayyad
Pranav Joshi
Manish Raj

Economy
Financials
Metals & Mining

afshans@dolatcapital.com
pranavj@dolatcapital.com
manishr@dolatcapital.com

91-22-40969745
91-22-40969724
91-22-40969731
91-22-40969753
91-22-40969737
91-22-40969754
91-22-40969750
91-22-40969733

Tel.+91-22-4096 9700

Equity Sales/Trading Designation

E-mail

Purvag Shah
Vikram Babulkar
Kapil Yadav
Parthiv Dalal
Jatin Padharia
P. Sridhar
Chirag Makati
Chandrakant Ware
Aadil R. Sethna

purvag@dolatcapital.com
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Principal
Co-Head Equities and Head of Sales
AVP - Institutional Sales
AVP - Institutional Sales
Institutional Sales - FII
Head Sales Trading
AVP - Sales Trading
Senior Sales Trader
Head of Derivatives

91-22-40969726
91-22-40969706
91-22-40969725

Tel.+91-22-4096 9797
91-22-40969747
91-22-40969746
91-22-40969735
91-22-40969705
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