MOSL: FUTURE CONSUMER (Buy)-Operating results in line-Gross margin expansion to pick up in FY20
Future Consumer: Operating results in line; Gross margin expansion to pick up in FY20
(FCON IN, Mkt Cap USD1.2b, CMP INR42, TP INR57, 35% Upside, Buy)
- 4QFY19 net sales grew 27.9% YoY to INR10.4b (our est. INR10.2b). EBITDA was up 73.7% YoY to INR287m (our est. INR288m). Adj. Loss for the quarter stood at INR103m (our est. loss of INR41m).
- Consolidated gross margin declined (-80bp YoY to 12.7% v/s our est. 12.9%). EBITDA margin expanded 70bp YoY to 2.8% (our est. 2.8%).
- During the year, the holding company reassessed the deferred tax asset on unutilized tax losses based on probability of future taxable income, and recognized net deferred tax asset of INR186.75m during the quarter. Thus, reported PAT stood at INR78m v/s loss of INR36m in base quarter.
- FY19 consol. performance: Sales/EBITDA grew 29%/86%. EBITDA margin expanded 80bp YoY to 2.6%.
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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