Reviews
In this edition, we have reviewed Rubfila International Ltd. and Dabur India Ltd. We suggest our reader-investors to HOLD Rubfila International Ltd. and Dabur India Ltd.
We had recommended Rubfila International Ltd. in Volume 36, Issue No. 20 dated August 30 to September 12, 2021 under the ‘Low Price’ segment. The recommended price for the stock was ₹105.80. We had recommended the stock on the basis of its strong dividend yield, high growth potential and attractive PE. Rubfila International is the solitary Indian manufacturer to produce both talcumcoated and silicon-coated rubber threads. The company has internationally accepted quality standards and its products are well-established among customers both in India as well as across the world.
It also creates premium products catering to highly niche areas like toys, fishing, catering, meat packing, and medical webbing and bungee jumping cords. Rubfila International produces threads with sizes ranging from 2.1 mm diameter to 0.28 mm diameter. The company’s quarterly consolidated financials depicts that net sales skyrocketed by 45.04 per cent in Q3FY22 to ₹123.87 crore as compared to ₹85.40 crore in Q3FY22. The operating profit climbed to 17.38 crore in Q3FY22 from ₹16.12 crore in Q3FY21 i.e. a 7.81 per cent increase. On the contrary, net profit slipped to ₹9.99 crore in Q3FY22 from ₹10.84 in Q3FY21, indicating a 7.82 per cent fall.
The annual performance of net sales shows amazing returns of 25.17 per cent in FY21 of ₹322.94 crore as compared to ₹258.01 crore in FY20. The operating profit surged 81.54 per cent from ₹28.44 crore in FY20 to ₹51.62 crore in FY21. Subsequently, the annual net profit rose by an astounding 101.63 per cent in We had recommended Dabur India in Volume 36, Issue No. 21 dated September 13 to September 26, 2021 under the ‘Choice Scrip’ segment. We had recommended the stock on the basis of strong global presence, robust cash position and continuous focus on innovation. Dabur India is the fourth-largest FMCG company in India with revenues crossing ₹9,500 crore and market capitalisation of over ₹38,000 crore. The company has experience of over 137 years. Dabur India is the country’s most trusted brand and the world’s largest in the ayurvedic and natural healthcare sector. It has a portfolio of over 250 herbal and ayurvedic products. Dabur India’s products have an international presence and are today available in over 120 countries around the world. Its brands are widely available across Europe, the Middle East, Russia, Africa and the US. Dabur India’s foreign profits today account for over 27 per cent of the total turnover. Analysing the financial performance of the company in the recent quarter, we find that net profit increased by 7.8 per cent from ₹2,728.84 crore in Q3FY21 to ₹2,941.75 crore in Q3FY22. Likewise, the operating profit gained by 10.55 per cent in Q3FY22 to ₹724.24 crore as compared to ₹655.12 crore in Q3FY21. Accordingly, net profit also climbed by 2.2 per cent to ₹504.46 crore in Q3FY22 from ₹493.60 crore in Q3FY21. The annual performance of the company shows positive results. Its net profit showed a decent rise by 9.86 per cent to ₹9,561.65 crore from ₹8,703.59 crore in FY20. The operating profit showed a FY21 to ₹33.43 as opposed to ₹16.58 crore in FY20. The company has undertaken a major expansion plan by putting up a new factory in Tamil Nadu. With additional capacity, it is optimistic in making further inroads into the domestic and international markets.
Any turnaround in the textile segment will percolate down to the undergarment sector too, benefitting the rubber thread industry. Rubfila International has the largest manufacturing capacity for rubber threads in the country. Also it caters to majority of the Indian customers spread over the hosiery clusters of Delhi, Kolkata, Ahmedabad, Surat and Tirupur along with other parts of the country. The company operates through a chain of regional marketing offices to maintain close contact with its customers. It has strong presence in the international market too with repeat orders from customers. Hence, we recommend HOLD.
We had recommended Dabur India in Volume 36, Issue No. 21 dated September 13 to September 26, 2021 under the ‘Choice Scrip’ segment. We had recommended the stock on the basis of strong global presence, robust cash position and continuous focus on innovation. Dabur India is the fourth-largest FMCG company in India with revenues crossing ₹9,500 crore and market capitalisation of over ₹38,000 crore. The company has experience of over 137 years. Dabur India is the country’s most trusted brand and the world’s largest in the ayurvedic and natural healthcare sector. It has a portfolio of over 250 herbal and ayurvedic products.
Dabur India’s products have an international presence and are today available in over 120 countries around the world. Its brands are widely available across Europe, the Middle East, Russia, Africa and the US. Dabur India’s foreign profits today account for over 27 per cent of the total turnover. Analysing the financial performance of the company in the recent quarter, we find that net profit increased by 7.8 per cent from ₹2,728.84 crore in Q3FY21 to ₹2,941.75 crore in Q3FY22. Likewise, the operating profit gained by 10.55 per cent in Q3FY22 to ₹724.24 crore as compared to ₹655.12 crore in Q3FY21.
Accordingly, net profit also climbed by 2.2 per cent to ₹504.46 crore in Q3FY22 from ₹493.60 crore in Q3FY21. The annual performance of the company shows positive results. Its net profit showed a decent rise by 9.86 per cent to ₹9,561.65 crore from ₹8,703.59 crore in FY20. The operating profit showed a similar gain of 10.98 per cent in FY21, rising to ₹2,327.97 crore as compared to ₹2,097.64 crore in FY20. The net profit exhibited decent returns of 17.13 per cent in FY21, giving earnings of ₹1,695.96 crore as opposed to ₹1,447.93 crore in FY20. The company has received PLI approval from the government for food processing, translating to ₹170 crore worth of benefits. This is on the back of investment of ₹550 crore at its Indore plant for a new juice line under construction. The management expects this facility extension to aid margin improvement in the food business by 2-3 per cent over the next 5- 7 years. The total addressable market, which was earlier ₹1,500 crore in juices and nectar category, has now grown to ₹10,000 crore for Dabur India due to introduction of drinks. The company currently has 10 per cent market share in this space and aspires to achieve up to 20 per cent share in the next few years. Hence, we recommend HOLD.