MOSL: MANPASAND BEVERAGES (Buy)-Riding on the back of distribution network expansion
​MANPASAND BEVERAGES: Riding on the back of distribution network expansion
(MANB IN, Mkt Cap USD0.8b, CMP INR420, TP INR492, 17% Upside, Buy)
- Revenue in-line; EBITDA misses, but PAT beats estimates: Overall revenue rose 22.8% YoY to INR1,258m (est. of INR1,281m) in 2QFY18. EBITDA margin shrunk 460bp YoY to 17.1% (est. of 20.9%) on account of a significant increase of 480bp in other expenses to 16.5% of net sales (est. of 11.9%). EBITDA declined 3% YoY to INR215m (est. of INR268m). Accordingly, adj. PAT grew 65.3% YoY to INR89m (est. of INR62m) in 2QFY18, led by higher-than-expected other income (INR64m v/s est. of INR21m).
- Commencement of distribution via Parle network: 2QFY18 witnessed commencement of product supply through Parle's distribution network in West Bengal. The company expects to expand distribution gradually to the entire eastern zone in FY18 owing to the traction seen in the pilot phase. Continuous expansion of the distribution network across 4.5m Parle outlets is expected to ensure strong presence of Mango Sip across the country. We expect utilization to inch higher to ~56% by FY19, despite significant capacity addition of 200,000 cases per day, led by the expanded reach of Mango Sip aided by new non-seasonal products.
- Continuous focus on new product launches to reduce seasonality: MANB has been active in the introduction of new products, as witnessed by the launch of Coco Sip and Jeera Sip. The company most recently has developed a new product Siznal, a sugarfree mix of fruit and vegetables, which as of now is in test market phase and should be launched commercially in FY18.
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.
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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