MOSL: MANPASAND BEVERAGES (Buy)-Growth continues to remain strong- Cutting estimates on delay in fourth plant
​Manpasand Beverages: Growth continues to remain strong; Maintain buy; Cutting estimates on delay in fourth plant
(MANB IN, Mkt Cap USD0.6b, CMP INR698, TP INR841, 20% Upside, Buy)
- Part of new capex to be delayed: Post QIP of INR5b, Manpasand Beverages' (MANB) plan to double capacity from 177,500cpd to 377,500cpd is largely on track. The company has already finalized land for three work-in-progress plants at Vadodara, Varanasi and Sri City (South). Each of these plants is expected to contribute capacity of 50,000 cases per day (cpd). The Vadodara plant is expected to be commissioned in 4QFY18, while the Varanasi and Sri City plants are scheduled for commissioning in 1QFY19. The fourth plant planned to be set up in Jharkhand/Orissa to cater to the north-east region is expected to be delayed (by one year to 4QFY19/1QFY20) with land not yet finalized.
- Fruits Up on strong footing: Our channel checks suggest that growth in Fruits Up remains strong, driven by the company's focus on advertisement/promotion and the launch of Fruits Up mini pack (160ml) in the carbonates category at an attractive price point of INR10/bottle. The company focuses on advertisement through print/television, and is also active on various social media platforms. Fruits Up contributed 23% of revenue in 3QFY17 (v/s 20% in the year-ago period), with the share expected to increase further to ~30% by FY19. Focusing on the health agenda, the company is planning to launch a drink based on a mix of vegetables and fruits in FY18.
- Summer season demand very strong, expecting stockouts: Post adverse impact of demonetization in 3QFY17, MANB is expected to bounce back sharply, aided by the addition of new capacities at the Ambala facility (came on stream in August 2016). Our channel checks suggest that demand at the onset of summer is very encouraging, with most dealers facing stockouts. We observe that its key SKU of 250ml and below continues to be in good demand, especially in the Mango SIP category. In our view, MANB continues to operate at full utilization to cater to growing demand.
Manpasand Beverages Limited is engaged in the business of manufacturing of fruit juices in the beverages segment. The Company is engaged in the business of manufacturing of fruit drink products with a primary focus on mango fruit. The Company offers mango-based fruit drink under the Mango Sip brand. It also offers its products in other brands, including Fruits Up, Manpasand Oral Rehydrating Salts, Pure Sip and Coco Sip. Under the Fruits Up brand, the Company offers fruit drinks and carbonated fruit drinks in various flavors, and under the Manpasand Oral Rehydrating Salts brand, it offers fruit drinks with energy replenishing qualities with a primary focus on North East India. It offers fruit drinks in various packaging types and sizes. Under the Manpasand Oral Rehydrating Salts brand, it offers products, such as MANPASAND ORS APPLE DRINK and MANPASAND ORS ORANGE DRINK. The Company's plants are located at Vadodara, Gujarat; Varanasi, Uttar Pradesh, and Dehradun, Uttrakhand.
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