Manpasand reported a healthy quarter overall albeit EBITDA/PAT were below our estimates. Overall, FY2017 was broadly in line with company guidance at start of the year and both Mango Sip and Fruits Up posted robust growth. The company’s aggressive scale-up plans remain on track. We continue to like the franchise and the management’s execution; however, rich valuations at 31X FY2019E EPS keep us cautious – retain ‘reduce’ with revised TP of Rs 700.
Manpasand reported a strong quarter on the topline front, albeit EBITDA/PAT were below estimates – revenues grew 29% y-o-y to Rs 2.67 billion, 5% above our estimates, EBITDA grew 21% y-o-y to Rs 518 million (5% below estimates) and PAT grew 22% y-o-y to Rs 313 million, 16% below estimates. Miss in EBITDA was on account of lower-than-expected GM, down 70 bps y-o-y to 34.3%. EBITDA margin contracted 120 bps y-o-y to 19.4% due to sharp 50% y-o-y jump in other expenses, up 180 bps y-o-y largely due to higher advertising spends.
Miss in PAT was on account of sharp 51% y-o-y jump in depreciation due to full capitalisation of Ambala plant and 240 bps jump in ETR to 13.2%. EPS growth was lower at 7% y-o-y due to dilution from QIP issue.
As per our estimate, Mango Sip posted 17-18% y-o-y growth in revenues aided by capacity addition (Ambala plant) and Fruits Up sales grew 70%+ y-o-y aided by stronger growth in Fruits Up CSD. Mango Sip accounted for ~71% of overall company’s sales for the quarter.
For FY2017, Manpasand posted revenue, EBITDA and PAT growth of 35%, 27% and 44% y-o-y respectively; EPS grew 26% y-o-y to Rs 12.7 – lower due to dilution on account of recent QIP issue. EBITDA margin contracted 125 bps y-o-y to 19.9% dragged by 80 bps dip in GM to 36.8% and 55 bps jump in other expenses (largely due to higher A&SP).
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For FY2017, Mango Sip grew 28% y-o-y and Fruits Up grew 64% y-o-y (CSD now accounts for ~50% of Fruits Up sales, up from 30% in FY2016); Mango Sip accounted for 75% of overall revenues.