MOSL: MANPASAND BEVERAGES (Buy)-Sound performance despite GST transitional concerns-Growth intact
​Manpasand Beverages: Sound performance despite GST transitional concerns; Growth intact
(MANB IN, Mkt Cap USD0.6b, CMP INR807, TP INR926, 15% Upside, Buy)
- Revenue in-line, PAT exceeds estimates: MANB's overall revenue increased 27% YoY to INR3,015m (est. of INR2,981m) in 1QFY18. EBITDA margin contracted 40bp YoY to 18.7% (est. of 19.8%) on account of an increase in raw material cost (+90bp) and employee expenses (+40bp). EBITDA rose 24% YoY to INR563m (est. of INR590m) in the quarter. Accordingly, adj. PAT rose 25.3% YoY to INR359m (est. of INR323m), led by higher-than-expected other income of INR98m (est. of INR24m).
- Smooth transition to GST regime: Due to its seasonal nature, MANB's business witnesses reduced stock at the channel end in the month of June every year. The destocking in June 2017 coincided with the implementation of GST, and thus, 1QFY18 had no major impact from GST transition. However, the rollout of GST delayed the supply of Mango Sip to distributors of Parle Products, which is now expected to commence in 2QFY18. Going forward, the continuous expansion of distribution network, both organically and via tie-ups, is expected to keep growth intact.
- New product launches alongside capacity expansion to aid growth: 1QFY18 witnessed strong growth of 18% and 46% YoY in Mango Sip and Fruits Up revenues, respectively. However, the company intends to ramp-up other products as well. With the upcoming capacity in Sri City, the company plans to add a dedicated line for Coco Sip, which would eliminate supply constraints and aid in growth of the product. Further, the company is expected to launch a new health-based product in FY18 to aid utilization.
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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