MOSL: MANPASAND BEVERAGES (Buy)-Tie-ups to expand distribution network-growth intact
​Manpasand Beverages: Tie-ups to expand distribution network; growth intact
(MANB IN, Mkt Cap USD0.7b, CMP INR769, TP INR900, 17% Upside, Buy)
- Revenue, EBITDA and PAT below estimates: Overall revenue grew 28.6% to INR2,672m (est. of INR3,272m) in 4QFY17 from INR2,078m in 4QFY16. The topline had an impact of INR400mn on account of INDAS adjustment. EBITDA margin shrunk 120bp from 20.6% in 4QFY16 to 19.4% (est. of 18.5%) in 4QFY17, as other expenses increased significantly due to higher ad spends (7.2% of sales in FY17 v/s 6.5% in FY16, majority of which were incurred in 4QFY17). EBITDA rose 21% YoY to INR518m (est. of INR605m). Adj. PAT thus grew 22.5% from INR256m in 4QFY16 to INR313m (est. of INR347m) in 4QFY17. For FY17, revenue grew 35% to INR7b, EBITDA margin shrunk 30bp to 20% and adj. PAT grew 44% to INR726m.
- Tie-up with Parle Products to expand distribution network: The tie-up will allow the company to access Parle’s pan-India 4.5m outlets, where MANB’s products will be sold under the brand name of ‘Mango Sip Gold’ (taking Gold from Parle-G Gold). Management expects to form a few more large-scale tie-ups with other companies in the near future (for products like Fruits Up and Jeera Sip), which would further expand its distribution network.
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.
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