MOSL: MANPASAND BEVERAGES (Buy)-Distribution network expansion on track
Manpasand Beverages: Distribution network expansion on track
(MANB IN, Mkt Cap USD0.7b, CMP INR381, TP INR467, 22% Upside, Buy)
- Revenue in-line; EBITDA and PAT beat estimates: MANB’s 3QFY18 revenue increased 39.7% YoY on a like-to-like basis (after netting off excise of INR37m from revenue of 3QFY17) to INR1,431m (est. of INR1,393m). EBITDA margin shrunk 130bp YoY to 18.7% (est. of 18%) in 3QFY18, led by an increase in raw materials cost (+250bp to 60.8% of net sales). However, other expense and employee cost declined 60bp and 40bp YoY to 16.3% and 4.3%, respectively. EBITDA grew 30% YoY to INR267m (est. of INR251m) in 3QFY18. Accordingly, adj. PAT grew 65.5% YoY from INR72m to INR120m (est. of INR103m).
- Ramping up distribution through Parle network: MANB had initiated product supply through Parle’s distribution network in West Bengal in 2QFY18 (revenue contribution ~5% in 3QFY18). The company has thus far profiled 150 distributors for 30,000 outlets and expects to reach a target of 1,000 distributors by 4QFY18. The distribution is expected to ramp up in line with capacity expansion planned by the company, with the next geographies to target being UP, Maharashtra and Gujarat.
- Trial run at Vadodara commences; Varanasi to follow suit: MANB has commenced the trial run of recently completed expansion of Vadodara facility, the benefit of which will be fully reflected in 4QFY18 and 1QFY19. Expansion of Varanasi facility, however, is delayed by 1-2 months, and is now expected to commence by April 2018.
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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