Dabur India arm acquires companies in South Africa Apr,12 2018

Dabur India said it has completed the acquisition of two South Africa-based companies – D&A Cosmetics Proprietary Ltd and Atlanta Body & Health Products Proprietary Ltd – through its subsidiary.

Accordingly, both companies have become step-down, wholly-owned Dabur India subsidiaries, the company said in a BSE filing.

The company had, last year, announced that it will acquire the two personal care products companies in South Africa for a total cash consideration of 50 million rands (about Rs25cr).

The stock gained 1.7% on the BSE. The scrip opened at Rs337.35 and has touched a high and low of Rs344 and Rs337.35, respectively.

Market share gains in select categories (especially in juices and toothpaste categories) and price cuts post-GST are the near-term volume triggers.

Further, new product launches in hair care, fruit drink, and ayurvedic segments will support volume growth, estimate 8% volume CAGR over FY17-20E. Also, anniversarization of both, currency and operating issues, would aid international performance. Thus, we expect revenue and PAT CAGR of 8.2% and 10.5%, respectively, over FY17-20E. Company currently trades at 32x FY20E EPS.

Dabur’s business is broadly categorized under (a) consumer care (47.6% of revenue), (b) foods (12.8%), (c) healthcare (5.9%), and (d) international business (30.2%). The company’s international business spans across Southeast Asia, Middle East & North Africa (MENA), and the USA.

In order to capitalize on the revival in rural consumption (~45% of revenue), Dabur plans to penetrate ~60,000 villages (particularly in South India) in the near term. Further, its recent acquisitions in African market in personal and hair care segments and strengthening online presence with large e-retailers (Amazon) would aid profitability.