Manpasand Beverages

Company Update
Target Price ` 1067 CMP ` 719 FY20E PE 21X

Index Details We spoke to the Manpasand management to get an update on the

Sensex 29,328 capacity expansion timeline and new business opportunities emerging.
Nifty 9,107 The key takeaways are as under:
Industry Beverages
1. The company recently completed a private placement of Rs 500
crore to part fund the Rs 600 crore capex for capacity addition
(balance to be met from internal accruals). This entire Rs 600
Scrip Details
crore expansion is expected to double the bottling capacity over
the next 18-24 months. Capacities are expected to come up in
MktCap (` cr) 4,097
Vadodara (Q3FY18), Sricity in Andhra Pradesh and Varanasi
BVPS (`) 106.4 (both of which are expected to come up in Q1FY19).
O/s Shares (Cr) 5.0 Another plant is expected to come up in the east and will be a
AvVol 4,882 while before it is set up. Land is not yet identified for the same.
52 Week H/L 775.8/493

STOCK POINTER
Div Yield (%) 0.1 2. Manpasands flagship brand, Mango Sip is growing by leaps and
bounds and is expected to grow at a CAGR of 33.1% to Rs 1,408
FVPS (`) 10.0
crore by FY20. The recent backlash against carbonated cola
Shareholding Pattern
drinks especially in the south and the upcoming Sricity facility
Shareholders % (45-50,000 units on a 3 shift basis) will help mark the foray of
Promoters 44.1 Manpasand in the southern markets. This coupled with the shift
Public 55.9 in user preferences to healthier fruit based beverages would
Total 100.0 mean better demand dynamics for the company. This will not
Manpasand vs. Sensex only add to revenues but help diversify its markets from being
31000 800
29000 700
primarily north and west dependant.
27000 600
25000
500
3. FruitsUP, its fuzzy fruit drink has achieved great success with its
23000
21000
400 Rs 10 sku. We estimate revenues from the same to grow at a
19000 300
17000 200 CAGR of 42% to Rs 439.4 crore by FY20 from the current Rs 108
15000 100
crore in FY16.
Sep-15

Jan-16

Apr-16
Nov-15
Jul-15

Jul-16
Feb-16
Mar-16

Jun-16
Aug-15

May-16
Oct-15

Dec-15

SENSEX MANPASAND

Key Financials (` in Cr)

EPS EPS RONW ROCE P/E EV/EBITDA
Y/E Mar Net Sales EBITDA PAT
(`) Growth (%) (%) (%) (x) (x)
2016 556.7 110.4 50.6 10.1 26.7 12.8 13.7 70.0 22.0
2017E 755.3 149.2 78.2 13.7 35.5 8.9 10.0 51.7 26.4
2018E 1,032.6 200.8 88.1 15.4 12.7 7.4 8.3 45.9 19.5
2019E 1,426.1 275.2 122.2 21.4 38.7 9.6 10.9 33.1 14.1
2020E 1,869.3 368.2 192.2 33.6 57.2 13.6 15.7 21.0 11.2

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 4. Coco Sip is facing sourcing issues and hence we do not expect
much revenue traction here. Remains a non-starter.
5. Distribution is expected to be doubled to reach 4 lakh touch
points from the existing 2 lakh units over the next three years.
6. Overall we expect revenues to grow at a CAGR of 35.4% to Rs
1,869.3 crore by FY20. Margins are expected to remain in the
range of 8.5-10.4%. We expect net earnings to grow at a CAGR of
39.6% to Rs 192.2 crore by FY20.
7. We have introduced FY20 estimates in our model. We have
scaled down our earnings estimates for the forecast period given
the capex and foray into the southern geography which should
increase A&P spend. We retain our BUY recommendation with a
revised price objective of Rs. 1067. At the CMP of 719, the stock
is available at 21X FY20 earnings and represents an upside of
48.4% over the next 30 months.

Variance of Estimates (Rs in crore)

Earlier Revised
Particulars Variance
Estimate Estimate
2017E
Sales 811.0 755.3 -6.9%
EBITDA 154.9 149.2 -3.7%
PAT 68.1 78.2 14.8%

2018E
Sales 1,141.8 1,032.6 -9.6%
EBITDA 224.9 200.8 -10.7%
PAT 116.2 88.1 -24.2%

2019E
Sales 1,538.5 1,426.1 -7.3%
EBITDA 306.2 275.2 -10.1%
PAT 190.2 122.2 -35.7%
2020E *
Sales - 1,869.3 100.0%
EBITDA - 368.2 100.0%
PAT - 192.2 100.0%
Source : Ventura Research

*FY20 estimates were not provided in the earlier estimates.

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 Financials and Projections
Y/E March, Fig in ` Cr FY16 FY17E FY18E FY19E FY20E Y/E March, Fig in ` Cr FY16 FY17E FY18E FY19E FY20E
Profit & Loss Statement Per Share Data (Rs)
Net Sales 556.7 755.3 1032.6 1426.1 1869.3 Adj. EPS 10.1 13.7 15.4 21.4 33.6
% Chg. 35.7 36.7 38.1 31.1 Cash EPS 21.5 27.4 35.7 48.0 63.4
Total Expenditure 446.3 606.1 831.7 1150.8 1501.0 DPS 1.0 2.5 3.0 3.5 4.5
% Chg. 35.8 37.2 38.4 30.4 Book Value 120.1 203.9 215.8 233.0 261.2
EBDITA 110.4 149.2 200.8 275.2 368.2 Capital, Liquidity, Returns Ratio
EBDITA Margin % 19.8 19.8 19.5 19.3 19.7 Debt / Equity (x) 0.0 0.0 0.0 0.0 0.0
Other Income 9.1 17.4 14.3 16.3 23.2 Current Ratio (x) 4.0 9.0 5.9 5.1 5.4
PBDIT 119.5 166.5 215.2 291.5 391.5 ROE (%) 12.8 8.9 7.4 9.6 13.6
Depreciation 57.1 78.5 116.0 152.3 170.3 ROCE (%) 13.7 10.0 8.3 10.9 15.7
Interest 5.7 0.2 0.2 0.3 0.3 Dividend Yield (%) 0.1 0.4 0.4 0.5 0.6
Exceptional items 0.0 0.0 0.0 0.0 0.0 Valuation Ratio (x)
PBT 56.7 87.9 99.0 138.9 220.9 P/E 70.0 51.7 45.9 33.1 21.0
Tax Provisions 6.2 9.7 10.9 16.7 28.7 P/BV 5.9 3.5 3.3 3.0 2.7
Reported PAT 50.6 78.2 88.1 122.2 192.2 EV/Sales 4.4 5.2 3.8 2.7 2.2
Minority Interest 0.0 0.0 0.0 0.0 0.0 EV/EBIDTA 22.0 26.4 19.5 14.1 11.2
PAT 50.6 78.2 88.1 122.2 192.2 Efficiency Ratio (x)
PAT Margin (%) 9.1 10.4 8.5 8.6 10.3 Inventory (days) 46.2 52.9 65.7 61.1 58.4
Other opr Exp / Sales (%) 0.0 0.0 0.0 0.0 0.0 Debtors (days) 43.8 52.2 56.7 58.5 55.8
Tax Rate (%) 10.9 11.0 11.0 12.0 13.0 Creditors (days) 36.8 38.0 42.6 43.6 41.3

Balance Sheet Cash Flow Statement

Share Capital 50.1 57.1 57.1 57.1 57.1 Profit Before Tax 56.7 87.9 99.0 138.9 220.9
Reserves & Surplus 551.5 1105.3 1172.7 1270.7 1431.8 Depreciation 57.1 78.5 116.0 152.3 170.3
Minority Interest 0.0 0.0 0.0 0.0 0.0 Working Capital Changes -34.6 -461.2 27.8 -89.4 -228.2
Long Term Borrowings 0.0 0.0 0.0 0.0 0.0 Others -9.6 -26.8 -25.0 -32.6 -51.6
Deferred Tax Liability 0.0 0.0 0.0 0.0 0.0 Operating Cash Flow 69.7 -321.7 217.8 169.2 111.3
Other Non Current Liabilities 0.0 0.0 0.0 0.0 0.0 Capital Expenditure -241.0 -152.5 -222.0 -138.0 -82.0
Total Liabilities 601.6 1162.5 1229.8 1327.9 1488.9 Other Investment Activities 9.1 17.4 14.3 16.3 23.2
Gross Block 373.2 523.2 773.2 923.2 973.2 Cash Flow from Investing -231.8 -135.1 -207.7 -121.7 -58.8
Less: Acc. Depreciation -104.9 -183.3 -299.3 -451.6 -622.0 Changes in Share Capital 366.8 500.0 0.0 0.0 0.0
Net Block 268.4 339.9 473.9 471.6 351.3 Changes in Borrowings -101.7 0.0 0.0 0.0 0.0
Capital Work in Progress 133.9 136.4 108.4 96.4 128.4 Dividend and Interest -11.8 -17.5 -20.9 -24.5 -31.4
Non Current Investments 0.0 0.0 0.0 0.0 0.0 Cash Flow from Financing 253.4 482.5 -20.9 -24.5 -31.4
Net Current Assets 179.5 673.7 640.5 755.2 1007.1 Net Change in Cash 91.2 25.7 -10.8 22.9 21.1
Long term Loans & Advances 19.8 12.5 7.0 4.5 2.0 Opening Cash Balance 3.5 92.5 118.5 107.7 130.7
Total Assets 601.6 1162.5 1229.8 1327.9 1488.9 Closing Cash Balance 92.5 118.5 107.7 130.7 151.8

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