Manpasand Beverages
BSE SENSEX
28,095
S&P CNX
8,636
25 July 2016
Update | Sector: Others
CMP: INR715
TP: INR850 (+19%)
Buy
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Product launches, capacity expansion to support growth
Aggressive capacity addition:
Manpasand Beverages’ (MANB) current capacity
of 125,000 cases/day (cpd) is targeted to increase to ~250,000 cpd by FY18
(including the 50,000 cpd-Ambala facility that is expected to be commissioned
in August 2016), as against our initial expectation of 225,000 cpd. Total capex
planned is in the range of INR3.5-4b over the next two years, which has the
potential to generate revenues of 2x. The Mango SIP brand is available in 24
states across India, with none of the states contributing more than 7-8% of
total revenues. The key states include UP, Gujarat, Punjab, Haryana and Orissa
– with additional capacities getting commissioned, the company will look at
exploring opportunities in new states.
Fruits Up to go pan-India, supported by increased capacity and advertisement
campaigns:
With the Ambala facility planned to go on stream, capacity for its
Fruits Up carbonates version is expected to increase from 17,500cpd to 42,500
cpd, while that for juice drinks (Mango SIP and Fruits Up non-carbonates) is
likely to increase from 107,500cpd to 135,000cpd. Currently, Fruits Up is sold in
Gujarat, Maharashtra, Delhi and Orissa, and the company has plans to launch
them pan-India. MANB will launch its aggressive advertisement campaign in
August 2016 to educate consumers about factors that differentiate its Fruits Up
brand from other cola drinks. We expect Fruits Up to register revenue CAGR of
100% over FY16-18E, contributing 34% of total revenues in FY18.
Margin improvement to be ploughed back into business:
The company
registered EBITDA margin of 19.8% in FY16, which is expected to rise further as
contribution of Fruits Up increases. However, the company plans to plough
back incremental margins into its business via increased advertisement spends
and schemes (currently 3-4% of revenue). Any gains from reduction in raw
material prices will also be ploughed back into the business.
New products in pipeline to aid growth:
MANB recently launched ‘Coco SIP’
packaged coconut water and plans to grow this business over the next two
years, with North India (where fresh coconut water is not available much) as its
main target market. The company, which operates on an outsourced
manufacturing model, is expected to register revenues of INR500m in FY18.
The other new product in pipeline is packaged sugarcane juice (first trial
completed). The company plans to launch this first-of-its-kind packaged
hygienic sugarcane juice product around 1QFY18.
Monetizing mineral water business:
India’s INR121b bottled water market is
growing at 18-20% annually. The company’s packaged drinking water brand
‘Pure SIP’ is offered free of cost on a promotional basis to customers along with
its Mango SIP or Fruits Up products. To benefit from increasing prices of
packaged drinking water (INR15/liter v/s INR12 last year), the company plans
to start monetizing its water business by the end of this year and has thus
expanded its senior management team.
Bloomberg
Equity Shares (m)
M.Cap.(INR b)/(USD b)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
12M Avg Val (INR m)
Free float (%)
MANB IN
50.1
35.8 / 0.5
743 / 349
31/39/104
37
49.6
Financials & Valuation (INR b)
Y/E Mar
2016 2017E 2018E
5.6
8.5
13.0
Sales
1.1
1.7
2.6
EBITDA
0.5
0.9
1.4
NP
10.1
17.1
28.3
EPS (INR)
26.7
69.1
65.8
EPS Gr. (%)
120.2 135.6 161.1
BV/Sh. (INR)
11.4
11.9
17.0
RoE (%)
12.2
13.4
19.1
RoCE (%)
P/E (x)
P/BV (x)
EV/EBITDA (x)
EV/Sales (x)
70.8
5.9
31.6
6.3
41.9
5.3
21.0
4.1
25.2
4.4
13.5
2.7
Estimate change
TP change
Rating change
Niket Shah
(Niket.Shah@MotilalOswal.com); +91 22 6129 1535
Chintan Modi
(Chintan.Modi@MotilalOswal.com); +912239825422
Investors are advised to refer through important disclosures made at the last page of the Research Report.
Motilal Oswal research is available on www.motilaloswal.com/Institutional-Equities, Bloomberg, Thomson Reuters, Factset and S&P Capital.

Manpasand Beverages
Valuation and view:
In view of increased capacity and expected ramp-up of
Fruits Up, we raise our revenue estimates by 1%/5% and earnings estimates by
2%/6% for FY17E/18E. MANB is on the cusp of a high-growth cycle, led by its
capacity expansion, new product launches and increase in distribution
network, which should lead to market share gains from 5% in 2016 to 7.5% in
2018. The launch of Fruits Up and Coco SIP brands is expected to help tackle
seasonality issue and ramp up capacity utilization, driving margins higher. We
expect sales and PAT CAGR of 53% and 67%, respectively, over FY16-18E. The
stock trades at a P/E of 41.9x/25.2x FY17/18E EPS. Additionally, with newer
avenues for growth evolving due to its healthy product pipeline and improving
revenue visibility from Mango SIP and Fruits Up, we increase our target P/E to
30x (earlier 28x). At a P/E of 30x FY18 EPS, we value the stock at a target price
of INR850 (19% upside) and maintain our
Buy
rating.
25 July 2016
2

Manpasand Beverages
Story in charts
Exhibit 1: Revenues to post 53% CAGR over FY16–18E
Revenues (INR m)
180.0%
12
19
29
34
Growth (%)
Exhibit 2: Fruits Up contribution to increase to 34%
Mango SIP
Fruits up
54.7%
22.7%
857
FY12
2,398
FY13
2,943
FY14
22.2%
3,598
FY15
5,567
FY16
51.8%
8,453
FY17E
53.3%
12,963
FY18E
100
100
100
88
81
71
66
FY12
FY13
FY14
FY15
FY16
FY17E
FY18E
Source: MOSL, Company
Source: MOSL, Company
Exhibit 3: Margins to remain stable
EBITDA (INR m)
17.8%
Margins (%)
19.8%
19.7%
20.0%
Exhibit 4: PAT to post 67% CAGR over FY16–18E
PAT (INR m)
268.1%
Growth (%)
16.3%
16.1%
15.5%
46.2%
140
FY12
387
FY13
457
FY14
641
FY15
1,104
FY16
1,665
FY17E
2,593
FY18E
61
FY12
224
FY13
-8.5%
205
FY14
300
FY15
68.8%
506
FY16
69.1%
855
FY17E
65.8%
1,418
FY18E
Source: MOSL, Company
Source: MOSL, Company
Exhibit 5: Utilizations to grow on expanded capacities
Capacity (cases/day,'000)
Utilisation (%)
58%
57%
55%
55%
Exhibit 6: RoCE to gradually improve to 19%
RoCE
24.3%
20.5%
18.2%
16.5%
12.2%
13.4%
19.1%
72.5
FY15
125
FY16
177.5
FY17E
240
FY18E
FY12
FY13
FY14
FY15
FY16
FY17E
FY18E
Source: MOSL, Company
Source: MOSL, Company
25 July 2016
3

Manpasand Beverages
Exhibit 7: Key assumptions
FY12
Installed Capacity cases per day
Tetra Pak Case - Fruit Drinks
Pet Bottle Case - Fruit Drinks
Pet Bottle Case - Carbonates
Revenues (INR m)
Fruit Drinks
Carbonates
Revenue Growth (%)
Fruit Drinks
Carbonates
12,000
12,000
-
857
857
-
FY13
19,750
15,250
-
2,396
2,345
-
180%
174%
FY14
26,667
30,000
-
2,932
2,850
-
22%
22%
FY15
30,000
32,500
10,000
3,597
3,332
113
23%
17%
FY16
40,000
67,500
17,500
5,567
5,233
334
55%
57%
196%
FY17E
50,000
85,000
42,500
8,543
7,503
968
55%
43%
190%
FY18E
50,000
125,000
65,000
12,963
11,040
1,681
53%
47%
74%
25 July 2016
4

Manpasand Beverages
Financials and Valuations
Standalone - Income Statement
Y/E March
Total Income from Operations
Change (%)
EBITDA
Margin (%)
Depreciation
EBIT
Int. and Finance Charges
Other Income
PBT bef. EO Exp.
EO Items
PBT after EO Exp.
Current Tax
Deferred Tax
Tax Rate (%)
Reported PAT
Adjusted PAT
Change (%)
Margin (%)
FY14
2,943
22.7
457
15.5
149
308
77
1
231
0
231
24
2
11.5
205
205
-8.5
7.0
FY15
3,598
22.2
641
17.8
205
436
107
4
334
0
334
36
-2
10.2
300
300
46.2
8.3
FY16
5,567
54.7
1,104
19.8
571
533
57
91
567
0
567
62
0
10.9
506
506
68.8
9.1
FY17E
8,453
51.8
1,665
19.7
805
860
0
100
961
0
961
106
0
11.0
855
855
69.1
10.1
(INR Million)
FY18E
12,963
53.3
2,593
20.0
1,115
1,477
0
115
1,593
0
1,593
175
0
11.0
1,418
1,418
65.8
10.9
Standalone - Balance Sheet
Y/E March
Equity Share Capital
Total Reserves
Net Worth
Deferred Tax Liabilities
Total Loans
Capital Employed
Gross Block
Less: Accum. Deprn.
Net Fixed Assets
Capital WIP
Total Investments
Curr. Assets, Loans&Adv.
Inventory
Account Receivables
Cash and Bank Balance
Loans and Advances
Curr. Liability & Prov.
Account Payables
Other Current Liabilities
Provisions
Net Current Assets
Deferred Tax assets
Appl. of Funds
E: MOSL Estimates
FY14
25
923
957
1
743
1,701
1,213
294
919
0
2
1,036
416
478
47
95
257
176
56
26
779
1
1,701
FY15
376
1,534
1,909
0
1,179
3,088
1,345
499
847
1,316
0
1,341
424
593
43
280
417
225
95
98
924
1
3,088
FY16
501
5,515
6,016
0
0
6,016
3,573
1,070
2,503
1,520
6
2,579
704
677
928
270
593
450
130
13
1,986
1
6,016
FY17E
501
6,285
6,785
0
0
6,785
5,373
1,875
3,498
1,200
6
3,166
1,116
857
855
338
1,086
707
254
126
2,080
1
6,785
(INR Million)
FY18E
501
7,560
8,061
0
0
8,061
7,373
2,990
4,383
1,200
6
4,179
1,733
1,243
685
519
1,709
1,137
389
183
2,471
1
8,061
25 July 2016
5

Manpasand Beverages
Financials and Valuations
Ratios
Y/E March
Basic (INR)
EPS
Cash EPS
BV/Share
DPS
Payout (%)
Valuation (x)
P/E
Cash P/E
P/BV
EV/Sales
EV/EBITDA
Dividend Yield (%)
FCF per share
Return Ratios (%)
RoE
RoCE
RoIC
Working Capital Ratios
Asset Turnover (x)
Inventory (Days)
Debtor (Days)
Creditor (Days)
Working Cap. Turnover (Days)
Leverage Ratio (x)
Debt/Equity
FY14
5.5
9.4
25.5
0.1
1.9
FY15
8.0
13.4
50.8
1.3
19.7
89.6
53.2
14.1
7.8
43.6
0.2
-28.2
21.2
18.2
18.8
1.7
52
58
22
91
0.8
18.8
16.5
23.2
1.2
43
59
23
89
0.6
FY16
10.1
21.5
120.2
1.0
9.9
70.8
33.2
5.9
6.3
31.6
0.1
-38.3
11.4
12.2
18.0
0.9
46
44
30
69
0.0
FY17E
17.1
33.2
135.6
1.7
10.0
41.9
21.6
5.3
4.1
21.0
0.2
-1.7
11.9
13.4
18.5
1.2
48
36
31
53
0.0
FY18E
28.3
50.6
161.1
2.8
10.0
25.2
14.1
4.4
2.7
13.5
0.4
-2.9
17.0
19.1
24.1
1.6
49
34
32
50
0.0
Standalone - Cash Flow Statement
Y/E March
OP/(Loss) before Tax
Depreciation
Interest & Finance Charges
Direct Taxes Paid
(Inc)/Dec in WC
CF from Operations
Others
CF from Operating incl EO
(Inc)/Dec in FA
Free Cash Flow
(Pur)/Sale of Investments
Others
CF from Investments
Issue of Shares
Inc/(Dec) in Debt
Interest Paid
Dividend Paid
Others
CF from Fin. Activity
Inc/Dec of Cash
Opening Balance
Closing Balance
FY14
232
149
77
-28
-412
17
6
23
-147
-124
0
1
-146
0
195
-77
0
-4
114
-9
56
47
FY15
333
205
102
-55
-65
521
6
527
-1,586
-1,059
0
4
-1,582
263
436
-101
-4
458
1,051
-4
47
43
FY16
567
571
-34
-62
-177
865
-349
516
-2,431
-1,915
-6
91
-2,346
4,000
-1,179
-57
-50
0
2,714
884
43
927
FY17E
961
805
-100
-106
-167
1,393
0
1,393
-1,480
-87
0
100
-1,380
0
0
0
-85
0
-85
-72
927
855
(INR Million)
FY18E
1,593
1,115
-115
-175
-561
1,856
0
1,856
-2,000
-144
0
115
-1,885
0
0
0
-142
0
-142
-170
855
685
25 July 2016
6

Manpasand Beverages
Corporate profile
MANB has the unique distinction of being the sole
listed company in the beverages sector. MANB
primarily focuses on mango-based drinks. Mango
Sip, launched in 1997, is the company’s flagship
product, contributing 80% to revenues in FY16 (97%
in FY14). Mango Sip is strategically focused on semi-
urban and rural markets; MANB derives ~55% of
revenues from rural areas, 20–22% through railways
and the remaining from urban areas.
Source: MOSL/Bloomberg
Company description
Exhibit 1: Sensex rebased
Exhibit 2: Shareholding pattern (%)
Promoter
DII
FII
Others
Jun-16
50.4
38.5
6.0
5.1
Mar-16
50.4
40.0
6.1
3.5
Jun-15
50.4
14.0
7.9
27.7
Exhibit 3: Top holders
Holder Name
Saif Partners India Iv Limited
SBI Magnum Multiplier Fund
ICICI Prudential Value Fund - Series 6
Goldman Sachs India Fund Limited
Aditya Birla Private Equity Sunrise Fund
Bnp Paribas Equity Fund
% Holding
22.4
6.6
4.0
2.6
2.2
1.9
Source: Capitaline
Note: FII Includes depository receipts
Source: Capitaline
Exhibit 4: Top management
Name
Dhirendra Singh
Abhishek Singh
Bhavesh Jingar
Designation
Chairman & Managing Director
Whole-time Director
Company Secretary
Exhibit 5: Directors
Name
Dhirendra Singh
Bharatkumar Vyas*
Bharti Naik*
Chirag Doshi*
Name
Milindkumar Babar*
Vishal Sood
Abhishek Singh
Source: Capitaline
*Independent
Exhibit 6: Auditors
Name
Deloitte Haskins & Sells
Niraj Trivedi
Sharp & Tannan Associates
Type
Statutory
Secretarial Audit
Internal
Exhibit 7: MOSL forecast v/s consensus
EPS
(INR)
FY17
FY18
MOSL
forecast
17.1
28.3
Consensus
forecast
-
-
Variation (%)
-
-
Source: Bloomberg
Source: Capitaline
25 July 2016
7

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Manpasand Beverages
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Analyst Certification
Disclosure of Interest Statement
Analyst ownership of the stock
Served as an officer, director or employee
MANPASAND BEVERAGES
No
No
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25 July 2016
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