Equity Shares (m)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
Avg Val, INRm
Free float (%)
43.8 / 0.7
Vadodara capacity expansion to aid growth; Varanasi and Sri City’s
512 / 310
expansion pushed ahead
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
31 January 2018
3QFY18 Results Update | Sector: Consumer
Distribution network expansion on track
Financials & Valuations (INR b)
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:
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.
We cut our earnings estimate by ~11% for both FY19 and
FY20 on account of delay of 1-2 months in commissioning of Varanasi and Sri
City facilities, as well as the expected commissioning of the plant in north-
east (Orissa) being pushed to FY20. We value the stock at 26x FY20E EPS,
with a target price of INR467 (22% upside) and maintain our
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 – Research Analyst
(Niket.Shah@MotilalOswal.com); +91 22 6129 1535
Aksh Vashishth – Research Analyst
(Aksh.Vashishth@motilaloswal.com); +91 22 6129 1553