Part 1 – Use fundamental analysis for equity research

1. Macroeconomic overview of the country

a. Economic Overview stating monitory policy

Macroeconomic indicators are statistics that indicate the current status of the economy of a

state depending on a particular area of the economy (industry, labor market, trade, etc.). They

are published regularly at a certain time by governmental agencies and the private sector.

Government Fiscal and Monetary policy

Stabilization of the economy (e.g., full employment, control of inflation, and an equitable

balance of payments) is one of the goals that governments attempt to achieve through

manipulation of fiscal and monetary policies. Fiscal policy relates to taxes and

expenditures, monetary policy to financial markets and the supply of credit, money, and

other financial assets.

Interest Rates Announcement

Interest rates play the most important role in moving the prices of currencies in the foreign

exchange market. As the institutions that set interest rates, central banks are therefore the

most influential actors. Interest rates dictate flows of investment. Since currencies are the

representations of a country’s economy, differences in interest rates affect the relative worth

of currencies in relation to one another.

b. Economic indicators

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Gross Domestic Product (GDP)

The GDP is the broadest measure of a country's economy, and it represents the total market

value of all goods and services produced in a country during a given year. Since the GDP

figure itself is often considered a lagging indicator, most traders focus on the two reports that

are issued in the months before the final GDP figures: the advance report and the preliminary

report. Significant revisions between these reports can cause considerable volatility.

Consumer Price Index

The Consumer Price Index (CPI) is probably the most crucial indicator of inflation. It

represents changes in the level of retail prices for the basic consumer basket. Inflation is tied

directly to the purchasing power of a currency within its borders and affects its standing on

the international markets. If the economy develops in normal conditions, the increase in CPI

can lead to an increase in basic interest rates. This, in turn, leads to an increase in the

attractiveness of a currency.

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Historically, the wholesale price index (WPI) has been the main measure of inflation in India.

However, in 2013, the governor of The Reserve Bank of India Raghuram Rajan had

announced that the consumer price index is a better measure of inflation. In India, the most

important category in the consumer price index is Food, beverages and tobacco (49.7 percent

of total weight). Fuel and light accounts for 9.5 percent; Housing for 9.8 percent; Transport

and communication for 7.6 percent; Medical care for 5.7 percent; Clothing, bedding and

footwear for 4.7 percent and education for 3.4 percent.

Wholesale Price Index

In India, the wholesale price index (WPI) is the main measure of inflation. The WPI

measures the price of a representative basket of wholesale goods. In India, wholesale price

index is divided into three groups: Primary Articles (20.1 percent of total weight), Fuel and

Power (14.9 percent) and Manufactured Products (65 percent). Food Articles from the

Primary Articles Group account for 14.3 percent of the total weight. The most important

components of the Manufactured Products Group are Chemicals and Chemical products (12

percent of the total weight); Basic Metals, Alloys and Metal Products (10.8 percent);

Machinery and Machine Tools (8.9 percent); Textiles (7.3 percent) and Transport, Equipment

and Parts (5.2 percent).

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Balance of Payments

The Balance of Payments represents the ratio between the amount of payments received from

abroad and the amount of payments going abroad. In other words, it shows the total foreign

trade operations, trade balance, and balance between export and import, transfer payments. If

coming payment exceeds payments to other countries and international organizations the

balance of payments is positive. The surplus is a favorable factor for growth of the national

currency.

India recorded a trade deficit of 14247.42 USD Million in September of 2014. The country's

trade gap widened 132.7 percent over the same month of the previous year, reaching the

highest deficit in sixteen months. Imports increased 26 percent year-on-year driven by a

449.7 percent surge in gold purchases and exports rose 2.73 percent. Balance of Trade in

India averaged -1893.76 USD Million from 1957 until 2014, reaching an all time high of

258.90 USD Million in March of 1977 and a record low of -20210.90 USD Million in

October of 2012. Balance of Trade in India is reported by the Ministry of Commerce and

Industry, India.

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India Trade Last Previous Highest Lowest Unit

Balance of Trade -14247.42 -10838.56 258.90 -20210.90 USD Million

Exports 28903.28 26958.22 30541.44 59.01 USD Million

Imports 43150.70 37796.82 45281.90 117.40 USD Million

Current Account -7.80 -1.20 7.36 -31.86 USD Billion

Current Account to GDP -1.70 -4.70 1.50 -4.70 Percent

External Debt 440614.00 390048.00 440614.00 75858.00 USD Million

Terms of Trade 60.20 61.90 100.00 60.20 Index Points

Foreign Direct Investment 2135.00 3562.00 5670.00 -60.00 USD Million

Remittances 8812.42 9574.31 10010.16 5999.10 USD Million

Tourist Arrivals 495000.00 569000.00 800000.00 129286.00

Gold Reserves 557.75 557.75 557.75 357.75 Tonnes

Crude Oil Production 778.00 761.00 813.00 526.00 BBL/D/1K

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India Foreign Exchange Reserves

Foreign Exchange Reserves in India increased to 314177.9 USD Million in the week ended

October 24th 2014 from 313682 USD Million in the previous week. Foreign Exchange

Reserves in India averaged 178393.18 USD Million from 1998 until 2014, reaching an all

time high of 383643 USD Million in the week ended December 18th, 2009 and a record low

of 29048 USD Million in the week ended September 11th, 1998. Foreign Exchange Reserves

in India is reported by the Reserve Bank of India.

Growth

Growth refers to a positive change in size, often over a period of time. It is conventionally

measured as the percent rate of increase in real gross domestic product, or real GDP.[1] Of

more importance is the growth of the ratio of GDP to population (GDP per capita), which is

also called per capita income. An increase in growth caused by more efficient use of inputs is

referred to as intensive growth. GDP growth caused only by increases in inputs such as

capital, population or territory is called extensive growth.

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Growth is usually calculated in real terms – i.e., inflation-adjusted terms – to eliminate the

distorting effect of inflation on the price of goods produced.

Saving & Investment.

Savings is whatever is left over after income is spent on consumption of goods and services,

investment is what is spent on goods and services that are not 'consumed', but are durable.

Since Income = Output, Savings = Investment for the total world's economy (or for a

hypothetical 'closed' economy with zero foreign trade).

Saving is what households (i.e. participants in the consumption account) do. The level of

saving in the economy depends on a number of factors (incomplete list):

A higher real interest rate will give a greater return on saving as banks offer more favourable

rates. Poor returns on risky forms of saving, e.g. stocks and bonds, make it more

advantageous to hold money savings (in contention between Keynesian and Monetarist views

here, mostly because of differences in definitions). Poor expectation for future economic

growth, increase households' savings as a precaution for a grim future.

Investment is made into capital (ie. plant and machinery, also 'human capital' - training and

education), with intent to increase productivity, efficiency and output of goods and services

In monetary terms, the relationship between savings and investment is modeled, rather than

being an accounting identity. Mutual funds, CDs, BICs, GICs, pension obligations, insurance

annuities, and other forms of savings marketed by financial intermediaries, all consist of

stocks, bonds, and cash balances, which in turn pay for the capital that increases productivity,

efficiency and output of goods and services.

Price Level and Inflation

Price level is the average of current prices across the entire area of goods and services

produced in the economy. The most common price level index is the Consumer Price Index,

(CPI).

In economics, inflation is a sustained increase in the general price level of goods and services

in an economy over a period of time.[1] When the general price level rises, each unit of

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currency buys fewer goods and services. Consequently, inflation reflects a reduction in the

purchasing power per unit of money – a loss of real value in the medium of exchange and

unit of account within the economy. A chief measure of price inflation is the inflation rate,

the annualized percentage change in a general price index (normally the consumer price

index) over time.

Interest Rates

The amount charged, expressed as a percentage of principal, by a lender to a borrower for the

use of assets. Interest rates are typically noted on an annual basis, known as the annual

percentage rate (APR). The assets borrowed could include, cash, consumer goods, large

assets, such as a vehicle or building. Interest is essentially a rental, or leasing charge to the

borrower, for the asset's use. In the case of a large asset, like a vehicle or building, the interest

rate is sometimes known as the "lease rate". When the borrower is a low-risk party, they will

usually be charged a low interest rate; if the borrower is considered high risk, the interest rate

that they are charged will be higher.

Infrastructure developments

Infrastructure investment as being investment in assets that provide sustainable services that

are essential for a functioning economy. The services provided are typically monopolistic or

quasi-monopolistic in nature as a result of geography or regulation. Demand for these

services is often inelastic to price changes and these investments can therefore provide

predictable and sustainable cash flows.

Sentiments

A view or opinion that is held or expressed.

2. Industry overview of selected companies

A. Sensitivity of the business cycle

Inflation: High food inflation has an adverse effect on the FMCG industry. People will spend

less money on discretionary items which will hit the FMCG industry. The food inflation is

very high around 12%, and the raw material cost has increased up to 15 to 20 per cent

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compared to last year. The operating margins which are typically about 20 per cent in the last

few years have seen a drop to almost 16 percent. FMCG is also dependent on the monsoons.

A good monsoon will not give any inflation worries and also increases the consumption

power creating demand for hair oil, biscuits, soaps, shampoos, laundry, and toilet soaps.

Interest Rates: As many companies are taking debt for their daily operations, thus increase in

interest rate will have adverse effect on the profitability of FMCG companies

Consumer sentiments: Slowing global economy together with an overall moderating

consumer sentiment might lead to a slow volume growth of FMCG segment.

B. Industry Life Cycle

Introduction:

It takes time of a new product to begin selling in volume. There may be manufacturing or

logistics issues to contend with. The marketplace may be unfamiliar with the product and

creating awareness takes time. Consequently product sales show a slow growth during the

introduction phase The FMCG adjust price, place (where the product is sold) and promotion

to meet his marketing objectives. For example, in markets that are large with high potential

competition it would make sense to invest heavily in promotion and to start with low prices.

This strategy would also apply for a product for which production cost would decline quickly

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with economies of scale. Using this strategy, the FMCG penetrates quickly before

competitors have a chance to introduce competing products.

Growth

The growth space is characterized by a rapid increase in sales volume. This is created by

increased product demand. The FMCG and logistics issues are likely resolved and the market

is far more aware of the product. Since economies of scale have started to take effect the

marketer should be able to increase promotional activities. At the same time competition will

begin to stiffen and so the marketer should make necessary adjustments to the 4 Ps of

marketing. For example, it may be appropriate to tweak the products by adding new features.

In this way the

Competition may be fended off. It may also make sense to reduce prices a little to bring in

more price sensitive consumers.

Maturity

The maturity phase is characterized by sales volumes leveling off. At this point competition

is strong and margins may begin to suffer. Signs of getting to this stage are that competitors

may start advertising more strongly or using other promotional means to increase sales.

Decline

Finally product sales begin to decrease and it is at this point that some serious marketing

Decisions need to be made. It may be possible to extend the life of a product by changing

some of its product attributes, repositioning it or by packaging it with other products. On the

other hand it may make sense to delete the product from your portfolio.

C. Structure and Characteristic of FMCG Industry

Competition: The market of FMCG is very competitive and manufacturers are coming

forward with the latest ideas and techniques to beat the competition and remain on the top. .

There are top business giants taking lead and several hundred emerging companies trying

hard to come forward and stand with leading FMCG producers. The easing of the trade

barriers encouraged the MNCs to invest in the Indian market to cater to the needs of the

consumers. The living standards rose in the urban sector due to high disposable income along

with the rise in the purchasing power of the rural families which increased the sales volume

of various manufacturers of the FMCG products in India.

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Branding: Creating strong brands is important for FMCG companies and they devote

considerable money and effort in developing bands. With differentiation on functional

attributes being difficult to achieve in this competitive market, branding results in consumer

loyalty and sales growth. Which account for almost 70 per cent of FMCG revenues in the

country spend almost 10per cent of their turnover on advertising and brand promotion. The

promotion strategy includes tying up with top actors and other celebrity brand ambassadors,

besides going in for high-profile launches at leading retail mall and outlets.

Distribution Network: Given the fragmented nature of the Indian retailing industry and the

problems of infrastructure, FMCG companies need to develop extensive distribution

networks to achieve a high level of penetration in both the urban and rural markets. Once

they are able to create a strong distribution network, it gives them significant advantages over

their competitors.

Contract manufacturing: As FMCG companies concentrate on brand building, product

development and creating distribution networks, they are at the same time outsourcing their

production requirements to third party manufacturers. Moreover, with several items reserved

for the small scale industry and with these SSI units enjoying tax incentives, the contract

manufacturing route has grown in importance and popularity.

Large unorganized sector: The unorganized sector has a presence in most product categories

of the FMCG sector. Small companies from this sector have used their geographical

advantages and regional presence to reach out to remote areas where large consumer products

have only limited presence. Their low cost structure also gives them an advantage.

D. Profit Potential of the industry : Porter Model

Rivalry among Competing Firms: In the FMCG Industry, rivalry among competitors is

very fierce. Players from unorganized and organized sectors continue to grab each other’s

market shares. Low brand awareness enables local players to market their spurious look-alike

brands. Organized retailers are competing for a limited density of population in a crowded

market and the competitors try to snatch their share of market. Market Players use all sorts of

tactics and activities from intensive advertisement campaigns to promotional stuff and price

wars etc. Hence the intensity of rivalry is very high which can control the entry of new firms.

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The resistance is very low and the structure of the industry is so complex that new firms can

easily enter and also offer tough competition due to cost effectiveness. Huge investments in

promoting brands, setting up distribution networks and intense competition, but the sector is

not capital intensive. Existing large players have competitive advantage on others because of

their large scale of operation, brand attachment, deeply entrenched distribution network and

the experience curve.

Potential Development of Substitute Product: There are complex and never ending

consumer needs and no firm can satisfy all sorts of needs alone. There are plenty of substitute

goods available in the market that can be re-placed if consumers are not satisfied with one.

The wide range of choices and needs give a sufficient room for new product development

that can replace existing goods. This leads to higher consumer’s expectation

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RivalryGovernment limitscompetitionLow

storage costsLarge industry size Relatively few competitors Exit

barriers are low

Barriers to Entry>Strong distribution network

required>Geographic factors limit competition >High capital

requirements>Strong brand names are important >Patents limit

newcompetition

Buyer PowerHigh price sensitivityLow buyer

pricesensitivity. Product is important tocustomerLarge

number of customers. Limited buyer choice

SubstitutesLimited number of

substitutes (Fmcg)Substantial product

differentiation (Fmcg)

Supplier PowerDiverse distribution

channelLarge number of substitute inputs Low cost of

switching suppliers Inputs have little impact oncostsVolume is

critical to supplier

Bargaining Power of Suppliers: The bargaining power of suppliers of raw materials and

intermediate goods is not very high. There is ample number of substitute suppliers available

and the raw materials are also readily available and most of the raw materials are

homogeneous. There is no monopoly situation in the supplier side because the suppliers are

also competing among themselves.

Bargaining Power of Consumers: Bargaining power of consumers is also very high. This is

because in FMCG industry the switching costs of most of the goods is very low and there is

no threat of buying one product over other. Customers are never reluctant to buy or try new

things off the shelf.

3. Company Analysis of the – non financial and financial parameters.

a. For non Financial statements

i. Company core competency

VISION

"Dedicated to the health and well being of every household"

PASSION FOR WINNING

We all are leaders in our area of responsibility, with a deep commitment to deliver results.

We are determined to be the best at doing what matters most.

PEOPLE DEVELOPMENT

People are our most important asset. We add value through result driven training, and we

encourage & reward excellence.

CONSUMER FOCUS

We have superior understanding of consumer needs and develop products to fulfill them

better.

TEAM WORK

We work together on the principle of mutual trust & transparency in a boundary-less

organization. We are intellectually honest in advocating proposals, including recognizing

risks.

INNOVATION

Continuous innovation in products & processes is the basis of our success.

INTEGRITY

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We are committed to the achievement of business success with integrity. We are honest with

consumers, with business partners and with each other.

ii. Strategy

They intend to significantly accelerate profitable growth. To do this,

Focus on growing our core brands across categories, reaching out to new geographies,

within and outside India, and improve operational efficiencies by leveraging technology

Be the preferred company to meet the health and personal grooming needs of our

target consumers with safe, efficacious, natural solutions by synthesizing our deep

knowledge of ayurveda and herbs with modern science

Provide our consumers with innovative products within easy reach

Build a platform to enable Dabur to become a global ayurvedic leader

Be a professionally managed employer of choice, attracting, developing and retaining

quality personnel

Be responsible citizens with a commitment to environmental protection

Provide superior returns, relative to our peer group, to our shareholders

iii. Management Quality

Dabur India Limited was set up in the year 1884 in Kolkata by Dr. S. K. Burman and was

renamed Dabur India Ltd. in 1936. It is now one of the largest commercial undertakings

in India. With an experience of more than 100 years Dabur India is now the 4th largest

company pertaining to the FMCG sector. The main products include food products, health

care, and personal care products. Dabur India Limited is known for its legendary quality

standards and has a present annual turnover of ` 2233.72 crore. Some of the powerful

brands of Dabur are Dabur Chyawanprash, Hajmola, Dabur Amla, Vatika, Real.

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For Financial

ii). Ratio

I. Debt Equity Ratio

A measure of a company's financial leverage calculated by dividing its total liabilities by

stockholders' equity. It indicates what proportion of equity and debt the company is using to

finance its assets. The acceptable Debt Equity Ratio needs to be 2:1

The ratio of Dabur India is 0.02, its good position of the company.

II. Current Ratio : 1.08

A liquidity ratio that measures a company's ability to pay short-term obligations.

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The ratio is mainly used to give an idea of the company's ability to pay back its short-term

liabilities (debt and payables) with its short-term assets (cash, inventory, receivables). The

higher the current ratio, the more capable the company is of paying its obligations. A ratio

under 1 suggests that the company would be unable to pay off its obligations if they came due

at that point. While this shows the company is not in good financial health, it does not

necessarily mean that it will go bankrupt - as there are many ways to access financing - but it

is definitely not a good sign.

III. Inventory Ratio: 8.72

A ratio showing how many times a company's inventory is sold and replaced over a period.

The days in the period can then be divided by the inventory turnover formula to calculate the

days it takes to sell the inventory on hand or "inventory turnover days." This ratio should be

compared against industry averages. A low turnover implies poor sales and, therefore, excess

inventory. A high ratio implies either strong sales or ineffective buying.

IV. Debtors Turnover Ratio: 16.83

This ratio should be compared against industry averages. A low turnover implies poor sales

and, therefore, excess inventory. A high ratio implies either strong sales or ineffective

buying. Lower debtor turnover ratio is not good because it tells us that we have not manage

debtors better ways. Money from debtors are not collected fastly.

V. Interest Coverage Ratio: 45.55

A ratio used to determine how easily a company can pay interest on outstanding debt. The

interest coverage ratio is calculated by dividing a company's earnings before interest and

taxes (EBIT) of one period by the company's interest expenses of the same period. The lower

the ratio, the more the company is burdened by debt expense. When a company's interest

coverage ratio is 1.5 or lower, its ability to meet interest expenses may be questionable. An

interest coverage ratio below 1 indicates the company is not generating sufficient revenues to

satisfy interest expenses.

VI. EBIDTA: 1,287.9 2014, YoY- 17.4 %

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Earnings Before Interest, Taxes, Depreciation and Amortization. An approximate

measure of a company's operating cash flow based on data from the company's income

statement. Calculated by looking at earnings before the deduction of interest expenses, taxes,

depreciation, and amortization. This earnings measure is of particular interest in cases where

companies have large amounts of fixed assets which are subject to heavy depreciation

charges or in the case where a company has a large amount of acquired intangible assets on

its books and is thus subject to large amortization.

VII. EBDT: 1136.2 (2014), Yoy- 19.2%

A profitability measure that looks at a company's profits before the company has to pay

corporate income tax. This measure deducts all expenses from revenue including interest

expenses and operating expenses, but it leaves out the payment of tax.

VIII. Return On Capital Employed:

Improvement in capital efficiency and margin profile of the business translated into

improvement in return ratios with Return on Invested Capital (ROIC) increasing to 43.6% in

fiscal 2013-14 as compared to 38.3% in fiscal 2012-13.

IX. Return on net worth: 35.33

The net worth ratio states the return that shareholders could receive on their investment in a

company, if all of the profit earned were to be passed through directly to them. Thus, the ratio

is developed from the perspective of the shareholder, not the company, and is used to analyze

investor returns.

X. Enterprise Value/ PBIDT: 174.38 crore/

XI. Closing Price on dated 3rd Nov 2014 : RS 230 Per share.

XII. Latest PE: 10.9

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A valuation ratio of a company's current share price compared to its per- share earnings.

Higher PE ratio is good for the company, it gives indication to investor whether to invest in

that company or not. Also returns are expected much more then lower EPS.

XIII. High Low in 52 Weeks: High/ Low in 52 weeks: 229 , 218.60, Volume : 1,386,400

XIV. Important Notations:

a. Growth Rate:

b. Bonus Details

c. Other Income: Income for a company that comes from anything other than its

ordinary operations. Other income includes items such as interest from the company’s

bank accounts, profit from the sale of a fixed assets etc.

d. PBIDT: PBITDA is essentially net income with interest, taxes, depreciation, and

amortization added back to it, and can be used to analyze and compare profitability

between companies and industries because it eliminates the effects of financing and

accounting decisions.

For Dabur India Ltd PBIDT is: 934.57

e. PBDT: Profit before Depreciation and tax: 915.22

f. PBT: A profitability measure that looks at a company's profits before the company

has to pay corporate income tax. This measure deducts all expenses from revenue

including interest expenses and operating expenses, but it leaves out the payment of

tax.

For Dabur India Ltd PBT is: 861.33

g. PAT: The net amount earned by a business after all taxation related expenses have

been deducted. The profit after tax is often a better assessment of what a business is

really earning and hence can use in its operations than its total revenues.

For Dabur India Ltd PAT is: 672.10

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h. EPAT: Profit after extraordinary gains or losses which are unusual or infrequent in nature:

For Dabur India Ltd EPAT is: 1465.62

iv. Sensitivity Analysis: only one iteration for sales dropping 95%

Sales 4870 Sales 243.5Other Income 108.85 Other Income 5.4425Stock Adj 12.32 Stock Adj 0.616Total Income 4991.17 Total Income 249.5585Total Expenses 4056.68 Total Expenses 202.834PBDIT 934.49 PBDIT 46.7245Interest 19.35 Int 0.9675PBDT 915.14 PBDT 45.757Dep 53.89 Dep 2.6945PBT 861.25 PBT 43.0625Tax 189.23 Tax 9.4615PAT 672.02 PAt 33.601

v. Z Score Formula: in crores

T1- Working Capital / Total Asset: 157.83/1946.63

= 0.081079

T2- Retained Earnings / Total Assets: 1727/1946.63

= 0.887174

T3 – Earning befor Internet and Tax: 1096.6/1946.63

= 0.563333

T4- Market Value of Equity / Total Assets: 174.38/3380.01

= 0.051592

T5- Sales/ Total Assets: 7073.2/3380.01

= 2.092657

Z Score Bankruptcy Model

Z= 1.2*0.081079+1.4*0.887174+ 3.3*0.563333+ 0.6*0.051592+ 0.999*2.092657= 5.319857

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Zone of Discrimination: 1.81< 5.319857< 2.99 “Grey “Zone.

vi. Equity Analysis:

1. Book Value : 15.23, PE Ratio :

2. Dividend Discount Model: Po = 230D1= 1.75G= 8.7%R= D1/Po+ g = 9%

3. Free Cash flow 2014 2013 2012

Net Profit Before Tax 861.33 749.67 631.92

Net Cash From Operating Activities 715.21 702.54 520.12

Net Cash (used in)/from Investing activity -101.41 -316.66 -188.58

Net Cash (used in)/from Financing Activities -534.85 -327.77 -232.66

Net (decrease)/increase In Cash and Cash Equivalents 75.97 58.11 98.88

Opening Cash & Cash Equivalents 67.39 261.29 192.41

Closing Cash & Cash Equivalents 143.36 319.40 291.29 Rs in crore

WACC 15%FCF1 143.36FCF2 319.4FCF3 291.29EV 560.0525959

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Particulars ValueEquity 174.38Debt 44.29Total 218.67We 80%Wd 20%Ke 17%Kd 6%WACC 15%

EV= (Free CF1)/ (1+WACC) + (Free CF2)/ (1+WACC) ^2+ (Free CF3)/ (1+WACC) ^3 =75422.58

4. CAPM model

Date Open Close Ra Ra-Ra' Open Close Rm Rm-Rm'(Rm-Rm')^2

01-10-14 223.05 220.45 - 0.1426681.4

726567.9

9 - -0.170.0300

1

02-10-14 221.1 221.1 0.29 0.4426487.5

126271.9

7 -111% -1.291.6575

0

03-10-14 221.1 221.1 0.00 0.1426229.6

726246.7

9 -10% -0.270.0724

1

06-10-14 221.1 221.1 0.00 0.1426394.3

726637.2

8 149% 1.311.7279

7

07-10-14 222.05 214.8 -2.85 -2.7126551.7

426297.3

8 -128% -1.452.1003

9

08-10-14 216 215.3 0.23 0.3826275.0

726384.0

7 33% 0.160.0244

6

09-10-14 216.35 216.35 0.49 0.6326537.4

226349.3

3 -13% -0.300.0929

7

10-10-14 215.3 214.9 -0.67 -0.5326260.3

525999.3

4 -133% -1.502.2545

3

13-10-14 215.1 209.25 -2.63 -2.49 2595026108.5

3 42% 0.250.0608

8

14-10-14 211.5 209.55 0.14 0.2926434.1

626429.8

5 123% 1.061.1182

4

15-10-14 210 210 0.21 0.3626552.4

526575.6

5 55% 0.380.1431

9

16-10-14 209.5 207 -1.43 -1.2926782.5

726787.2

3 80% 0.620.3880

1

17-10-14 208.2 205.2 -0.87 -0.7326889.5

126851.0

5 24% 0.070.0042

3

20-10-14 207.85 205.55 0.17 0.3126959.5

7 26752.9 -37% -0.540.2902

8

21-10-14 208.5 206.25 0.34 0.4826788.7

326880.8

2 48% 0.300.0929

7

22-10-14 211 210.3 1.96 2.1127017.4

427098.1

7 81% 0.640.4036

4

23-10-14 214.85 214.85 2.16 2.3127098.9

427346.3

3 92% 0.740.5513

7

24-10-14 214.85 214.85 -0.14 0.0027098.9

427346.3

3 17% 0.000.0000

0

27-10-14 218 196.55 -0.15 -0.0127098.9

427346.3

3 25% 0.080.0057

4

Equity Research Assignment 2Page 22

28-10-14 205.65 205.65 -0.18 -0.0327098.9

427346.3

3 27% 0.100.0092

2

29-10-14 212 212 -0.19 -0.0527098.9

427346.3

3 20% 0.020.0005

9

30-10-14 215.95 215.2 -0.20 -0.0627098.9

427346.3

3 28% 0.110.0123

3

Beta : 0.523616 Rf: 8.44 % Expected Return is 13%

Conclusion:

FMCG major Dabur India has reported a 15.1 percent growth in net profit at Rs 287.5

crore in September quarter compared to Rs 249.74 crore in same quarter last year

supported by higher sales, other income and lower finance cost.

The company maintained its volume growth within the guidance of 8-10 percent.

Volume growth for September quarter was 8.7 percent compared to 8.3 percent in

previous quarter.

Operating profit (earnings before interest, tax, depreciation and amortisation)

increased by 6.7 percent year-on-year to Rs 351 crore but margin declined by 60 basis

points to 18.2 percent during the quarter, impacted by higher advertising and publicity

expenses.

Gross margin during the same period fell 70 basis points to 53.2 percent from 53.8

percent. Advertising spends as a percentage of sales rose by 10 basis points to 13.1

percent during the quarter.

At 15:10 hours IST, the stock was quoting at Rs 230.10, up Rs 4.20, or 1.86 percent

on the BSE.

One can buy Dabur India for a target price of Rs 215 and keep a stoploss at Rs 200.

Equity Research Assignment 2Page 23

Equity Research Assignment 2Page 24