MOSL: FUTURE CONSUMER (Buy)-A miss on sales and margin, expect growth to pick up
Future Consumer: A miss on sales and margin, expect growth to pick up
(FCON IN, Mkt Cap USD1.3b, CMP INR47, TP INR69, 48% Upside, Buy)
- Future Consumer's (FCL) reported net sales grew 26.9% YoY to INR8.4b (est. of INR9.4b) in 1QFY19. EBITDA increased 133.4% YoY to INR201m (est. of INR255m). The company reported a loss of INR61m (est. of a profit of INR74m), which narrowed from a loss of INR102m in 1QFY18.
- Segmental performance: Centre of Plate portfolio grew by just 19% in 1QFY19. Deflationary environment in Pulses portfolio is expected to have impacted realization. Fruits & Vegetables portfolio grew by 67% YoY, Processed foods portfolio grew by 33% YoY, and Home & personal care portfolio grew by 40% YoY.
- Gross margin expanded 10bp YoY (+110bp QoQ) to 14% (est. of 15.4%). Lower other expenses (-110bp YoY) and staff cost (-10bp YoY) led to EBITDA margin expansion of 110bp YoY (+30bp QoQ) to 2.4% (est. of 2.7%).
Future Consumer Ltd, formerly Future Consumer Enterprise Ltd, is a holding company. It is a food company, which is engaged in branding, marketing, sourcing, manufacturing and distribution of fast moving consumer goods, food and processed food products. It also has agri-sourcing operations in India. Its product portfolio includes product categories, such as basic foods, ready to eat meals, snacks, frozen and processed food products, beverages, personal care and home care under its own portfolio of brands. It has also commenced its operations for marketing and distribution of oats and oats-based cereal products in India through its subsidiary company at Sri Lanka. It offers food and spice products under the brands, Fresh & Pure, Golden Harvest, Sangi's Kitchen and Karmiq; snacks and beverages under Tasty Treat and Sunkist brands; home care products under Clean Mate and Pratha brands, and personal hygiene care products under brands, such as Care Mate, Sach, Swiss Tempelle and Think Skin.
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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