Saturday, June 9, 2012

>DABUR: Launch of ‘Dabur Uveda Sunblock Cream SPF 30’

Targeting premium growth

With the launch of ‘Dabur Uveda Sunblock Cream SPF 30’, Dabur has entered the sun‐protection market (~INR2.4bn, growing at a healthy growth rate). The new launch is a premium product and indicates Dabur’s focus on its skin care portfolio, offering protection against UV radiation and aiding skin lightening. Also, it has a unique water‐resistant formula. We believe that marked step‐up in new launches in FY13 and funneling gross margin expansion to ad spend are likely to aid volume growth for Dabur. Re‐iterate ‘BUY’ on the stock as it has corrected 9% post Q4FY12 results, in spite of improving volume growth (9.5%, 8% and 5% in Q4FY12, Q3FY12 and Q2FY12 respectively).

Increased focus on skin care portfolio
Dabur has ventured into the sun‐protection market with the launch of Dabur Uveda Sunblock Cream SPF 30. It also has a unique water‐resistant formula that offers better protection even after being exposed to water due to swimming, sweating or rain. The product is offered with existing Uveda range in Delhi, Maharashtra, Punjab, Bangalore and Hyderabad in modern trade outlets and with Beauty Advisors.

Well‐positioned in high‐growth segment
Sun‐protection market (~INR2.4bn), a small segment of the total skin care market (~INR34bn), is witnessing humungous action with players like VLCC, Nivea and others introducing a range of products to leverage the untapped potential. Dabur’s Uveda Sunblock Cream SPF 30 is priced at INR175 per 50g, at a premium to other ayurvedic sun‐block offerings by unlisted players like Himalaya (INR175 per 100ml), Shahnaz Hussain (INR110 per 80g), Lotus Herbals (INR131 per 50g) and VLCC (INR295 per 100g).

The new launch will infuse freshness into skin care portfolio (which witnessed pick up in Q4FY12 growing at ~18% YoY post slowdown in past months).

Outlook and valuations: Positive; maintain ‘BUY’
We remain positive on Dabur. At CMP, the stock is trading at 24.3x and 19.8x FY13E and FY14E respectively. We reiterate ‘BUY’ on the stock and recommend ‘Sector Outperformer’ rating on a relative return basis.

To read report in detail: DABUR