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Motilal Oswal
Manpasand Beverages (Buy)
CMP: ₹540
Target: ₹750
Manpasand Beverages (MB) is a leading player in beverages segment through its flagship product Mango Sip, a mango-based fruit drink launched in 1997. The product contributed 80 per cent to revenues in FY16 (97 per cent in FY14). To diversify the portfolio, MB launched Fruits Up in FY15, a premium fruit drink (carbonated and non-carbonated) in mango, litchi, guava, apple, orange and mixed fruit flavours. It recently launched its natural coconut water through Coco Sip in May. In 2015, it raised ₹400 crore through IPO to set up a manufacturing facility in Haryana (₹150 crore), modernisation of existing plants and repay the entire long-term debt (₹100 crore).
Manpasand is on the cusp of a high growth cycle, led by capacity expansion, new product launches and increase in distribution network, which should lead to market share gains from current 5 per cent to 7.5 per cent by 2018. Launch of Fruits Up and Coco Sip is expected to beat seasonality and ramp up capacity utilisation thereby driving margins higher. We expect sales and PAT CAGR of 49 per cent and 63 per cent, respectively.
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