MOSL: GSK CONSUMER (Neutral)-Operating performance in-line-PAT beat led by higher other income
GSK Consumer: Operating performance in-line; PAT beat led by higher other income
(SKB IN, Mkt Cap USD3.7b, CMP INR5919, TP INR6255, 6% Upside, Neutral)
- GSK Consumer’s (SKB) sales (incl. operating income) rose 7.0% YoY to INR11.8b (est. of INR11.8b). EBITDA grew 14.7% YoY to INR2.5b (est. of INR2.5b), while adj. PAT rose 20.4% YoY to INR2.1b (est. of INR1.5b). Domestic like-to-like sales (adjusted for GST accounting impact) grew 10% YoY (volume growth of 8% v/s est. of +6%).
- Market share expanded 20bp QoQ to 44.3% in Horlicks, but contracted 460bp QoQ to 11.6% in Horlicks Extensions and 10bp QoQ to 11.2% in Boost.
- Gross margin expanded 250bp YoY to 68.3% in 4QFY18. Staff costs were up 240bp YoY to 11.7% of sales and other expenses were flat at 21.1% of sales. However, A&P to sales declined 140bp YoY to 14.3% of sales, restricting EBITDA margin expansion to 140bp YoY (21.2% v/s est. of 20.8%).
- Balance sheet: FY18 saw a sharp improvement in the working capital cycle, led by lower inventory days (from 42 days to 37 days), lower debtor days (from 31 days to 25 days) and an increase in creditor days (from 77 days to 81 days).
- FY18 results: Net sales, EBITDA and adj. PAT grew 8.2%, 5.7% and 6.6% YoY, respectively. EBITDA margin contracted 50bp YoY to 20.4%.
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.
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