MOSL: GSK CONSUMER (Neutral)-In-line performance-Commodity inflation creeping up
GSK Consumer: In-line performance; Commodity inflation creeping up
(SKB IN, Mkt Cap USD4.4b, CMP INR7410, TP INR7785, 5% Upside, Neutral)
- Sales increased 7.5% YoY to INR11.2b (our estimate: INR11.3b), led by domestic HFD volume growth of 8% YoY (our estimate: 4%); overall HFD volume growth was 9.6% YoY. EBITDA increased 14.9% YoY to INR2.4b (our estimate: INR2.4b), while adjusted PAT grew 35.1% YoY to INR2.2b (our estimate: INR1.95b), led by a steep 105% YoY increase in other income.
- Domestic business saw a volume growth of 8.7% YoY and domestic HFD category saw revenue growth of 7.5% YoY.
- Value market share for Horlicks stood at 43% (-110bp YoY, -30bp QoQ) while value market share for Boost stood at 10.8% (-50bp YoY, -10bp QoQ). Volume market share for Horlicks/Boost stood at 49.5%/13.9%.
- Gross margin expanded 170bp YoY to 70.7%. Higher staff costs (+140bp YoY to 14%) and ad spends (+110bp YoY to 12.1%) were almost entirely offset by lower other expenses (-220bp YoY to 23.2%). EBITDA margin, thus, expanded 140bp YoY to 21.4% (our estimate: 21.2%).
- 9MFY19 performance: Sales/EBITDA/adj. PAT grew 11.4%/29.9%/36% YoY. EBITDA margin expanded 330bp YoY.
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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