Emami Vs Dabur India: Investing in what you consume’ has been a trend for quite some time now. This is because of the reason that these stocks generally fall under the category of growth stocks.
As the name suggests, these stocks tend to have a higher growth potential which can lead to high returns. In this article on Emami Ltd. VS Dabur India Ltd., we will take a look at two of the biggest FMCG companies in India. Keep reading to find out more about them!
Industry Overview
The industry saw a decline during the first half of the last fiscal which was driven by strict restrictions and lockdowns imposed due to the covid pandemic. However, it was one of the few sectors which started seeing a positive recovery in the second half of the year.
The Fast-moving consumer goods (FMCG) sector is India’s fourth-largest sector with household and personal care accounting for 50% of FMCG sales in India. The Indian FMCG sector is estimated to be worth USD 62 Billion ( Rs 4.3 trillion) in size today.
Apart from that, the union government’s production-linked incentive (PLI) scheme gives the FMCG companies a major opportunity to boost exports with an outlay of US$ 1.42 billion.
All these factors are likely to take the FMCG market in India to a new height and also lead to an increase at a CAGR of 14.9% to reach US$ 220 billion by the year 2025.
About the company
Emami Ltd
Emami Group is an Indian multinational conglomerate company. The company has seven manufacturing units across India and one overseas unit. It caters to a number of niche categories in the personal care and healthcare segments.
Apart from that, the products of the company are sold in more than 60 countries across the globe. Products of the company are available in n 4.5 million retail outlets across India.
Dabur India Ltd
Dabur Ltd is an Indian multinational consumer goods company. With a legacy of over 137 years, the company today operates in key consumer product categories like Hair Care, Oral Care, Health Care, Skin Care, Home Care and Foods. The company’s direct retail coverage has expanded to more than 1.3 million outlets across the country.
Emami Vs Dabur India – Milestones of the company
Emami Ltd: The company has an exceptional position when it comes to having a healthy market share. Four of its products namely BoroPlus Antiseptic Cream, Navratna Cool Oil, Fair and Handsome Cream and Zandu & MenthoPlus Balms have more than 50% market share individually in their segments.
Dabur India Ltd: Their iconic brand ‘Dabur Red Paste’ touched the 1,000 Crore mark in FY21. Apart from that, the market capitalization of the company touched the Rs One Trillion mark.
Financial metrics
Now let us compare the financials of both the companies
Emami Vs Dabur India – Revenue & Net Profit
In terms of revenue, Dabur is ahead of Emami. While Emami has seen a fluctuation in its earnings in the last three years, Dabur has had a steady upward trend. In FY21, Dabur India Ltd. earned Rs 9,547 Cr while Emami Ltd. reported Rs 2,881 Cr.
In terms of net profit, Dabur is way ahead of Emami. Both the companies have seen a rise in their net profit in the last two years. Dabur India earned a net profit of Rs 1,693.30 Cr while Emami Ltd. reported Rs 454.70 Cr in FY21.
| Revenue & Net Profit (Rs in Cr) | |||||
|---|---|---|---|---|---|
| 2017 | 2018 | 2019 | 2020 | 2021 | |
| Revenue | |||||
| Emami Ltd. | 2,488 | 2,531 | 2,695 | 2,655 | 2,881 |
| Dabur India Ltd. | 7,614 | 7,722 | 8,515 | 8,685 | 9,547 |
| Net Profit | |||||
| Emami Ltd. | 340.42 | 307.14 | 303.23 | 302.91 | 454.70 |
| Dabur India Ltd. | 1,276.94 | 1,354.39 | 1,442.33 | 1,444.96 | 1,693.30 |
Emami Vs Dabur India – How Much Are The Investors Earning?
The ROE is a financial metric which shows the efficiency of a company in generating profits. In the general trend, Dabur has maintained a higher ratio than Emami. However, in FY21 Emami had a ratio of 25.59% while Dabur India Ltd. had 24.14%.
The ROCE shows how well the company is able to utilise its capital to generate profit. It can be seen that in the last few years Dabur has had a higher ratio than Emami. However, in FY21 Emami had a higher ratio of 30.16 than Dabur which has 27.29.
The earnings per share tell how much the company is able to make per share. In the last five years, Dabur has consistently had a higher ratio than Emami.
| Return ratios | |||||
|---|---|---|---|---|---|
| 2017 | 2018 | 2019 | 2020 | 2021 | |
| Return On Equity (ROE) | |||||
| Emami Ltd. | 20.2 | 16.32 | 14.9 | 15.81 | 25.59 |
| Dabur India Ltd. | 28.97 | 26.18 | 25.88 | 23.99 | 24.14 |
| Return On Capital Employed (ROCE) | |||||
| Emami Ltd. | 21.36 | 18.75 | 18.87 | 18.99 | 30.16 |
| Dabur India Ltd. | 30.92 | 28.01 | 27.49 | 26.41 | 27.29 |
| Earnings Per Share (EPS) | |||||
| Emami Ltd. | 0.15 | 0.14 | 0.07 | 0.07 | 0.1 |
| Dabur India Ltd. | 7.25 | 7.69 | 8.17 | 8.18 | 9.58 |
Emami Vs Dabur India – Valuation of the company
The PE ratio of a company shows the valuation of a company and is used for comparison with its peers. The sectoral PE for both companies is 55.81. Dabur has a TTM PE of 50.59 while Emami has a TTM PE of 21.57. This means that Emami is undervalued as compared to Dabur and the industry as a whole.
The PB ratio is used by investors to identify potential investment opportunities. A lower ratio is considered ideal. In FY21 both the companies had their ratios in a similar range.
The EV/EBITDA ratio is used to compare the value of a company including debt, to the company’s cash earnings. A lower ratio is considered to be ideal. In the last three years, Emami has had a lower ratio than Dabur.
| Valuation Parameter | |||||
|---|---|---|---|---|---|
| 2018 | 2019 | 2020 | 2021 | 2022 | |
| Price to Earnings Ratio (PE) | |||||
| Emami Ltd. | 70.33 | 78.92 | 59.88 | 25.43 | 47.67 |
| Dabur India Ltd. | 38.23 | 42.53 | 50.09 | 55.06 | 56.44 |
| Price to Book Value (P/B) | |||||
| Emami Ltd. | 13.65 | 12.04 | 8.75 | 4.22 | 12.3 |
| Dabur India Ltd. | 10.26 | 10.26 | 13 | 12.22 | 12.67 |
| EV/EBITDA | |||||
| Emami Ltd. | 30.83 | 33.14 | 23.7 | 10.43 | 22.46 |
| Dabur India Ltd. | 27.31 | 30.29 | 35.67 | 37.79 | 40.7 |
Emami VS Dabur India – Shareholding Pattern
Emami VS Dabur India – Future prospects
Emami
The company has always strived to be ahead of the competition. That will remain the motto of the company going forward as well. In Fact, they aim to grow even faster.
As per the management of the company, this means new categories are likely to be explored, new products will be launched, old products might be relaunched and brand extensions will be made. Apart from this, the management will also focus on expanding its reach across the globe.
Dabur India
The 8 power brands of the company have been their key focus which has enabled them to grow rapidly and have a significant market share. Apart from that, the company is also focusing on streamlining its supply chains to be better prepared for any disruptions.
Further, it plans to prioritise its Ayurvedic Healthcare products and medicines as the segment has been picking up in the last few quarters.
In Closing
The rising inflation in India and around the world poses a threat to these companies. It will have a significantly negative impact on their operations. All eyes will be on the policies that will be adopted by the government to ease the situation.
Apart from this, on an individual level, the growth and leadership of either of these companies will depend on the strategies that they develop moving forward. That’s all for this post. Happy Investing!
Have you invested in either of these companies? Let us know in the comments below!
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