… but rejoice! Dabur increases its adspends

24 Jul,2012

By Jwalit Vyas

 

Dabur India delivered a good performance in June 2012 quarter. The major surprise of the June quarter numbers was the year-on-year 51 per cent jump in its advertising and publicity expenses.

 

Dabur had kept its advertising cost in control over the past several months in order to maintain its profitability. However, the strategy seems to have changed as the company again has started pumping money in marketing its products.

 

Its advertisement to sales ratio increased by 310 bps year-on-year to 15.7 per cent in March 2012 quarter. Its sales grew by 20 per cent y-o-y to Rs1,462 crore, which its net profit grew by 17 per cent to Rs 150 crore. Operating margins remained flat at 16 per cent which is positive for the company considering the additional advertisement expense.

 

The second most diversified Indian FMCG company showed a healthy growth across segments. Its food business which contributes to around 15 per cent of the company’s net sales grew by 31 per cent, while its consumer care business which is 80 per cent of its total sales grew at 15 per cent. Its retail business (Kaya Skin Clinic) continues to be loss making but the size of this business is negligible when compared to its overall business.

 

Dabur’s stock closed 0.1 per cent up at Rs 118 while the Sensex was down by 1.7 per cent. The company’s stock is trading at a price to earning multiple of 31.

 

Source: The Economic Times

Copyright © 2012, Bennett, Coleman & Co. Ltd. All Rights Reserved

 

Post a Comment 

Comments are closed.