Manpasand Beverages
BSE SENSEX
29,993
S&P CNX
9,317
9 May 2017
Update
| Sector:
Consumer
CMP: INR698
TP: INR841(+20%)
Growth continues to remain strong; Maintain buy
Cutting estimates on delay in fourth plant
Buy
Stock Info
Bloomberg
Equity Shares (m)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
M.Cap. (INR b)
M.Cap. (USD b)
Avg Val, INRm
Free float (%)
MANB IN
57.1
776 / 493
-2/-9/16
39.9
0.6
73
55.9
Financials Snapshot (INR b)
FY17E FY18E FY19E
Y/E Mar
Sales
7.6
11.4
16.9
EBITDA
1.5
2.3
3.4
NP
0.8
1.3
1.8
EPS (INR)
13.3
22.0
31.1
EPS Gr. (%)
31.7
65.3
41.6
BV/Sh. (INR)
203.4 219.8 241.6
RoE (%)
7.7
9.3
13.5
RoCE (%)
8.7
10.4
15.2
P/E (x)
52.5
31.7
22.4
P/BV (x)
3.4
3.2
2.9
Shareholding pattern (%)
As On
Mar-17 Dec-16 Mar-16
Promoter
44.1
44.1
50.4
DII
30.4
31.7
40.0
FII
21.2
20.1
6.1
Others
4.3
4.1
3.5
FII Includes depository receipts
Stock Performance (1-year)
Manpasand Bever.
Sensex - Rebased
770
690
610
530
450
Part of new capex to be delayed:
Post QIP of INR5b, Manpasand Beverages’
(MANB) plan to double capacity from 177,500cpd to 377,500cpd is largely on
track. The company has already finalized land for three work-in-progress plants
at Vadodara, Varanasi and Sri City (South). Each of these plants is expected to
contribute capacity of 50,000 cases per day (cpd). The Vadodara plant is
expected to be commissioned in 4QFY18, while the Varanasi and Sri City plants
are scheduled for commissioning in 1QFY19. The fourth plant planned to be set
up in Jharkhand/Orissa to cater to the north-east region is expected to be
delayed (by one year to 4QFY19/1QFY20) with land not yet finalized.
Fruits Up on strong footing:
Our channel checks suggest that growth in Fruits
Up remains strong, driven by the company’s focus on
advertisement/promotion and the launch of Fruits Up mini pack (160ml) in the
carbonates category at an attractive price point of INR10/bottle. The company
focuses on advertisement through print/television, and is also active on various
social media platforms. Fruits Up contributed 23% of revenue in 3QFY17 (v/s
20% in the year-ago period), with the share expected to increase further to
~30% by FY19. Focusing on the health agenda, the company is planning to
launch a drink based on a mix of vegetables and fruits in FY18.
Summer season demand very strong, expecting stockouts:
Post adverse
impact of demonetization in 3QFY17, MANB is expected to bounce back
sharply, aided by the addition of new capacities at the Ambala facility (came on
stream in August 2016). Our channel checks suggest that demand at the onset
of summer is very encouraging, with most dealers facing stockouts. We
observe that its key SKU of 250ml and below continues to be in good demand,
especially in the Mango SIP category. In our view, MANB continues to operate
at full utilization to cater to growing demand.
Valuation and view:
We believe strong summer, along with the focus on
advertisement, will drive superior performance at MANB. Demand continues to
be strong in the fruit drinks category. However, on account of capacity delay of
the fourth plant, we cut earnings estimates by 19% for FY19. The company’s
presence in low-ASP/SKU products, addition of new capacities and foray into
newer geographies provide comfort. Also, the planned advertisement
campaign for Fruits Up should complement its recent Fruits Up capacity
addition at Ambala. Thus, we expect a robust revenue and PAT CAGR of 45%
and 52%, respectively, over FY16-19E. We value the stock at a P/E of 27x FY19E
EPS, with a target price of INR841 (20% upside). Reiterate
Buy.
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.
Niket Shah
(Niket.Shah@MotilalOswal.com); +91 22 6129 1535
Chintan Modi
(Chintan.Modi@MotilalOswal.com); +91 22 6129 1554