MOSL: GSK CONSUMER (Neutral)-Operating performance above expectations
GSK Consumer: Operating performance above expectations; maintain Neutral
(SKB IN, Mkt Cap USD4.1b, CMP INR6687, TP INR6710, Neutral)
- GSK Consumer (SKB) posted 12.3% YoY sales growth (including operating income) to INR11.1b (in-line). EBITDA grew 38% YoY to INR2.3b (our estimate: INR2.2b). Reported PAT rose 51.6% YoY to INR2b, led by a steep 75% YoY rise in other income. PAT adjusted for one-offs was INR1.8b (our estimate: INR1.6b).
- Value market share was flat YoY and QoQ for Horlicks (44.2% in 1QFY19) as well as Boost (11.2% in 1QFY19). Volume market share stood at 50.4% for Horlicks and 14.2% for Boost.
- Gross margin expanded 430bp YoY to 69.6%. Staff costs were up 190bp YoY to 15.2%, A&P to sales was flat YoY at 13%, while other expenses declined 140bp YoY to 20.16%. EBITDA margin expanded 390bp YoY to 20.8% (our estimate: 19.4%). EBITDA of INR2.3b was 6% ahead of our estimate.
- Concall highlights: (1) Company expects mid-to-high single-digit category volume growth, going forward. (2) Outlook on key commodity costs is positive but the steep deflation seen in 1QFY19 YoY is unlikely, going forward.
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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