MOSL: GSK CONSUMER (Neutral) - New products to support growth over medium term
GSK Consumer: New products to support growth over medium term; Valuations fair
(SKB IN, Mkt Cap USD4.1b, CMP INR6421, TP INR6350, 1% Downside, Neutral)
- GSK Consumer’s (SKB) sales grew 20.3% YoY (including operating income) to INR10.3b. EBITDA rose 21.7% YoY to INR2b (est. of INR2b), while adj. PAT increased 20.0% YoY to INR1.6b (est. of INR1.5b). Domestic sales grew 20%, led by 17% volume growth. Domestic like-to-like sales (adjusted for GST accounting impact) grew 7% YoY (volume growth of 4%).
- Market share expanded 20bp QoQ to 44.1% in Horlicks, but shrunk by 20bp QoQ to 16.2% in Horlicks Extensions and by 10bp QoQ to 11.3% in Boost.
- Gross margin expanded 110bp YoY to 68.8%. However, staff costs increased by 50bp YoY to 12.9%, A&P to sales grew 20bp YoY to 10.9%, and other expenses were up 20bp YoY to 25.3%, restricting EBITDA margin expansion to 20bp YoY (19.7% v/s est. of 20.5%). Other income increased 15% YoY, ahead of our expectation.
- 9MFY18 results: Net sales were up 8.7% YoY to INR31.4b. EBITDA rose 2.5% YoY to INR6.3b. EBITDA margin contracted 120bp YoY to 20.1%. PAT was up 1.6% YoY to INR4.9b.
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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