Comments
Baroda-based Manpasand Beverages is making all efforts to get back onto the radars of investors. Earlier this year, the fruit drinks maker’s stock price had suffered a huge crash following its auditor Deloitte Haskins & Sells walking out a few days before fourth quarter earnings were to be announced.
At its AGM, the company’s Chairman Dhirendra Singh announced that “an audit firm among the Big 4” will be brought in as the Joint Statutory Auditor of Manpasand Beverages. Upon finalisation and appointment in compliance with Companies Act, 2013, it will be intimated to the stock exchanges, he added.
Speaking to BusinessLine , Dhirendra Singh said, “The company will be able to finalise one (auditor) in a month.”
Some brokerages had stopped tracking the stock as soon as it had crashed. On whether any of them are returning, Singh said, “We have stepped up efforts in stakeholder outreach programme through active engagement with investors, buy-side and sell-side analysts and are expecting positive developments soon.”
A few funds too had exited the stock at that time. According to Singh, new investors such as Al Mehwar Commercial Investments LLC Noosa have joined the shareholder list.
Working capital cycle
On why Manpasand’s debtor-turnover ratio is the slowest in the last five-and-a-half-years, while its net sales and profit after sales have grown at a smart clip, Singh explained, “The working capital cycle of the company is within industry norms. The exclusive tie-up with Parle Products Pvt Ltd gives access to the largest retail distribution network of over 60 lakh retail outlets, a 10-fold opportunity to the company against the present retail network. (However), activation of these outlets requires providing better credit facility. The company is targeting to efficiently manage the working capital cycle and is expecting to further improve the debtor-turnover ratio by the end of FY2018-19.”
On the growth plans for the maker of Mango Sip, FruitsUp, OXY Sip and Manpasand ORS, Singh said that in the last three months, it had expanded the facility in Vadodara, Gujarat, and set up a new manufacturing facility at Varanasi, UP, taking its total capacity to 2.75 lakh cases a day. “Two more new facilities are being added — one at Sri City, AP, which will be commissioned by December 2018, and the second at Khurda, Odisha, which will be completed within the next 15 months. (This will) double the production capacity. We hope to grow by 30 per cent this year.”
Future launches
Going forward, the company expects to launch new product segments that include milk-based drinks, fruit-based sugar-free drinks, glucose drinks and protein-based drinks, Singh said.
“Manpasand is trading at a high PE multiple of 38x, compared to its peers’ PEs — Orient Beverages at 13.53x and Varun Beverages at 49.01x. Orient, the closest peer, is trading at a lower PE due to an exception in the previous quarter Q1FY19. However, on PB ratio, Manpasand trades at the lowest multiple compared to its peers, which makes it a lucrative buy. Also, its operating performance and sales volumes, compared to peers, are significantly higher. We believe Manpasand is a good ‘Buy’,” says Rahul Sharma, Senior Research Analyst, Equity99.
Comments
COMMENT NOW
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.