Manpasand Beverages Ltd. share price target

Statutory Auditors Resignation: The event came up just a week ahead of Q4FY18 earnings release. Thus we put Manpasand Beverages rating UNDER REVIEW from BUY earlier.Deloitte Haskins & Sells, the statutory auditors suddenly resigned with effect from 26th May, 2018 few days ahead of signing off on annual accounts with the reason being non provision of significant Information.

Manpasand Beverages announced on May 27, 2018 about the resignation of its statutory auditor (M/s. Deloitte Haskins & Sells, Chartered Accountants) with effect from May 26, 2018. However, the reason for this abrupt exit has not been provided by the company. Subsequently, the company also announced the appointment of new auditors (M/s. Mehra Goel & Co) and has delayed the board meeting scheduled on May 30th, 2018.

Statutory Auditor resignation leads us to put rating UNDER REVIEW. As a result, we put our rating UNDER REVIEW until clarity emerges from Q4FY18 results and further disclosures in FY2018 Annual Report.

28 May 2018 Deloitte Haskins & Sells was the statutory auditor of MANB since FY11. The auditor resigned four days prior to the scheduled 4QFY18 result announcement and stated the following reason, We This event has come as a surprise, just ahead of the earnings release. We will wait for the 4QFY18 results and further disclosures.

Deepening Distribution Parle Products tie up a kicker, MANBs Growing Market Share, Robust Financial Growth to continue over FY17-20E, MANB sweetly positioned in the Non-Carbonates/ Juice Drinks segment which is growing at 2x of Carbonates

Deepening Distribution Parle Products tie up a kicker, MANBs Growing Market Share, Robust Financial Growth to continue over FY17-20E, MANB sweetly positioned in the Non-Carbonates/ Juice Drinks segment which is growing at 2x of Carbonates

Strategic Synergies in FMCG Sector to Augur Revenue: Manpasand Beverages has registered a 65.7% increase in its bottom line in Q3FY18. Revenues have grown by 39.7% due to growth in both its flagship brand Mango Sip and Fruits Up. Revenue is expected to grow at a CAGR of 36.5% over 2 years and margins are expected to strengthen on declining sugar prices, increasing distribution channelsand capacity utilization.

Manpasand Beverages reported steady Q3FY18 result with Net sales and Net profit growth of 39.7% and 65.4% on yoy basis. Operational margin was impacted by surge in material cost and higher promotional expenses; however PAT improvement was supported by lower depreciation cost.

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).

Manpasand Beverages reported Q2FY18 sales growth below our estimates. Net sales increased by 22.8%, however, Net profit was up by 65.6% on yoy basis. It is on track to doubling its capacity in the next 12-15 months. A new plant in Vadodara is expected to become operational in December 2017, while other two plants in Varanasi and Sri City are expected to become operational in FY19E. It is also adding line to its existing plants to meet the demand during peak period.

Riding on the back of distribution network expansion Revenue in-line; EBITDA misses, but PAT beats estimates: Overall revenue rose 22.8% YoY to INR1,258m (est. of INR1,281m) in 2QFY18. EBITDA margin shrunk 460bp YoY to 17.1% (est. of 20.9%) on account of a significant increase of 480bp in other expenses to 16.5% of net sales (est. of 11.9%). EBITDA declined 3% YoY to INR215m (est. of INR268m). Accordingly, adj. PAT grew 65.3% YoY to INR89m (est. of INR62m) in 2QFY18, led by higher-thanexpected other income (INR64m v/s est. of INR21m). Commencement of distribution via Parle network: 2QFY18 witnessed...

Manpasand Beverages reported decent set of numbers for Q1FY18. Net sales increased by 28.6%, while Net profit was up by 25.5% on YoY basis. It has announced bonus in the ratio of 1:1. It has already started capex for doubling its capacity in the next 12-18 months to be financed from the proceeds of the QIP issue (Rs. 500 Cr) done in FY17.

Manpasand Beverages reported steady set of numbers for Q4FY17. Net sales increased by 28.6%, while Net profit was up by 22.4% on YoY basis. With doubling of capacity in the next 12-18 months, entry in new markets and launch of new brands, we expect the company to post healthy growth in the coming years.

Company Update

Whirling Capacity Expansion to Help Growth Manpasand Beverages registered an YoY increase of 47.1% in its net profit from Rs. 49 Mn in Q3FY16 to Rs. 72 Mn in Q3FY17 supported by decline in finance cost and 72.0% YoY rise in other income to Rs. 60 Mn. The company's gross sales for Q3FY17 recorded a 13.9% YoY jump to Rs. 1025 Mn as against Rs. 899 Mn in sameperiod last fiscal. EPS for Q3FY17 stood at Rs. 1.27 backed by consumer demand for its flagship Mango Sip and other new launches.

Manpasand Beverages Ltd (MBL) has the distinction of being the only listed player in the beverages segment in India. Having entered the beverages market through its flagship product Mango Sip, a mango based fruit drink, increasing consumer preference for healthier drinks has prompted MBL to extend its product portfolio under four new brands Fruits Up, Manpasand ORS, Pure Sip and Coco Sip. MBL plans to expand it capacities by 1.13x over FY16-18E from 177500 cases per day in FY16 to 377500 cases per day in FY18E by setting 4 new plants with each having a production capacity of 50,000 cases per day with a CAPEX outlay of 500 crs raised through the QIP process. With this QIP, MBL has become a...

India's leading fruit juice player, Manpasand Beverages reported below than expected revenue due to currency ban but profit growth surprised positively. Net sales increased by 13.9%, while Net profit surged by 49.1% on YoY basis. With doubling of capacity in the next 12-18 months, entry in new markets and launch of new brands, we expect the company to post healthy growth in the coming years, and thus maintain Buy.

Strengthening Presence with Brands such as Mango Sip & Fruits Up: Diversifying portfolio - Taking the edge off seasonality risk: The company generates 70% of its total revenue in 1st and 4th quarters due to seasonality of mango-based fruit drinks such as flagship brand Mango Sip. Fruits Up and Coco Sip being sold throughout the year would help MANB take the edge off seasonality risk. Capacities for fruit drinks are substitutable.

Stellar growth, focus on branding through advertisements Revenue in line, but EBITDA margins below estimates: Manpasand Beverages' (MANB) 1QFY17 revenues grew a stellar 58% YoY to INR2,293m (est. of INR2,246m) (revenue net of excise duty). Revenue of Mango SIP grew 47% YoY, while that of Fruits Up grew a robust 120% YoY. Revenue mix for Mango SIP, Fruits Up and others (incl. ORS and Coco SIP) stood at 77:22:1 v/s 84:16:0 in 1QFY16. Revenues also included contribution of ~INR120m from Modern Trade, which was absent in the base quarter. EBITDA margin declined 360bp to...