MOSL: GSK CONSUMER (Neutral)-Market share continues to decline, schemes impact gross margins
​GSK Consumer: Market share continues to decline, schemes impact gross margins
(SKB IN, Mkt Cap USD3.7b, CMP INR5647, TP INR5400, 1% Downside, Neutral)
- GSK Consumer (SKB) posted 3.2% YoY sales growth (including operating income) to INR11.2b. EBITDA grew 6.6% YoY to INR2.6b (our estimate: INR2.3b), while adjusted PAT grew 4.7% YoY to INR1.9b (our estimate: INR1.75b). Like-to-like GST-adjusted sales grew 4.8% YoY. Like-to-like domestic sales grew 6% YoY while exports declined 26% YoY. Domestic volumes grew 2.5% YoY (on base of 3% decline in 2QFY17) and price increase was around 4% (taken in 1QFY18; SKB has not taken price increase since then).
- Gross margin shrank 130bp YoY to 64.7%. High raw material costs along with higher ad spend (up 50bp YoY to 12.3%) were set off by decrease in other expenditure (down 210bp YoY to 17.3%) and lower staff costs (down 50bp YoY to 13.6%). EBITDA margin expanded 70bp YoY to 23.4% in 2QFY18.
- Concall highlights: (1) Management is working towards attaining double-digit revenue growth. (2) Market share decline has been arrested sequentially, but YoY as well as over March 2017, share decline continues.
GlaxoSmithKline Consumer Healthcare is engaged in the manufacture of health food, malted foods, health drinks, milk fluid and powders, biscuits, health care products and pharmaceutical products and powders. Co.'s flagship product, Horlicks, is scientifically developed and specifically caters to the nutritional needs of the Indian diet. It helps meet the requirements of essential nutrients in children, such as iron and vitamins that aid iron absorption. Horlicks is sold in a number of countries across the world. In addition, Co. also manufactures and markets brands such as Boost, Viva, Maltova, Biscuits, Foodles, Eno, Crocin, Iodex and Sensodyne.
Motilal Oswal Financial Services Ltd. is a reputed name in Financial Services and Online Trading with group companies providing services such as Private Wealth Management, Retail Broking and Distribution, Institutional Broking, Asset Management, Investment Banking, Private Equity, Commodity Broking, Currency Broking, Principal Strategies & Home Finance.
Motilal Oswal Securities is a group company of Motilal Oswal Financial Service Limited which started as a stock trading company and has blossomed into well diversified firm offering a range of financial products and services. Motilal Oswal has built a reputation as the source for best stock trading company and this has taken a wealth of experience, knowledge and expertise, constantly working in tandem, over the years.
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