Dabur Ltd on Wednesday entered India’s branded spices and seasoning market when it announced the acquisition of Badshah Masala Pvt Ltd for Rs 587.52 crore.
Badshah, which is engaged in the manufacturing, marketing, and export of ground spices, blended spices and seasonings, has a major presence in Gujarat, Maharashtra, and Telangana.
The acquisition will see the chyawanprash to peanut butter maker entering India’s Rs 25,000 crore branded spices and seasoning market, which is dominated by regional brands. Dabur is acquiring a 51 per cent stake in Badshah for Rs 587.52 crore, less proportionate debt as of the closing date.
This puts the enterprise value at Rs 1,152 crore. It also translates to a revenue multiple of around 4.5 times and an EBITDA (earnings before interest, depreciation, taxes and amortisation) multiple of around 19.6 times 2022-23 estimated financials. While 51 per cent of Badshah’s shareholding will be acquired before March 31, 2023, and the remaining 49 per cent after five years, Dabur said that cost and revenue synergies will be tapped to capture the full potential of Badshah.
It expects the transaction to be cash EPS neutral in the first year and accretive thereafter. A press statement from the company pointed out that the acquisition is in line with its strategic intent to expand the foods business to Rs 500 crore in three years and expand into new adjacent categories.
“We intend to leverage our international market presence to grow this business globally’’, Dabur India chairman Mohit Burman said while commenting on the acquisition. According to chief executive officer Mohit Malhotra, the branded spices market in India is growing at healthy double digits, led by increasing consumption, upgradation from unbranded to branded products and growing preference for regional flavours across states.
The company reported a 2.85 per cent decline in its consolidated net profit to Rs 490.86 crore for the second quarter that ended September 30. Dabur had posted a net profit of Rs 505.31 crore in the corresponding quarter of the previous year. However, its revenue from operations rose to Rs 2,986.49 crore during the quarter under review against Rs 2,817.58 crore in the corresponding quarter of the previous fiscal. Dabur added that it “continued to demonstrate agility and resilience to deliver steady organic growth in an environment that remains challenging, marked by unprecedented inflation and consequential impact on consumption’’.