Manpasand Beverages Ltd :- High growth potential stock


(Priyaranjan Mahto) #1

COMPANY NAME :-- Manpasand Beverages Ltd INDUSTRY :-- Non-alcoholic beverages MARKET CAPITALISATION :-- Rs. 2679/- crores. SHAREHOLDERS’ FUND :-- Rs. 602/- crores (as on 31/03/16) DEBTS :-- NIL (as on 31/03/2016)
PRICE TO EARNINGS :-- 50 times
PROMOTERS’ HOLDING :-- 50.43%
FINANCIALS :-- http://www.screener.in/company/MANPASAND/

Manpasand Beverages Limited is an India-based company, which is engaged in the business of manufacturing of fruit juices in the beverages segment. The Company’s flagship brand is Mango Sip. It offers mango based fruit drink under the Mango Sip brand. Its other brands include Fruits Up and Manpasand ORS. Under the Fruits Up brand, the Company offers differentiated carbonated fruit drinks with real fruit content and fruit drink with relatively higher fruit content of pulp. Carbonated fruits drinks is available in grape, orange and lemon flavors while fruit drinks is available in mango, apple, guava, litchi, orange and mixed fruits flavors. Manpasand ORS consists of rehydration salts and fruits contents, and is available in two flavors, apple and orange. The Company offers its products in pet bottles and tetra packs. The Company’s plants are located at Vadodara, Gujarat; Varanasi, Uttar Pradesh, and Dehradun, Uttrakhand.

Manpasand Beverages Launches Packaged Tender Coconut Water Under Coco Sip Brand Name
After the success of Fruits Up,Manpasand Beverages Limited, India’s leading fruit juice player, has now entered the coconut drink segment under the ‘Coco Sip’ brand name. This new product consists of 100 percent natural packaged tender coconut water. Positioned as a healthy and premium beverage the product will be available in 200 ml PET bottle.
India has a vast coastline of 7517 Km and is the third largest coconut producer in the world. While branded & packaged coconut water consumption in India is still at a nascent stage, it has a big market in developed countries. For example, in the USA, coconut water drunk by consumers has shot up from less than 5 lakh litres in 2004 to around 200 million litres in 2014 according to one study. In case of Brazil, packaged coconut water accounted for around 20% of its total juice market in 2003 and by 2010 it had grown to around 65% share of total juice market. It is estimated that nearly 700 million litres of branded coconut water have been consumed worldwide in 2015 - this of course does not include the millions of litres of unbranded coconut water consumed in India and globally.
Speaking about their new brand launch, Mr. Dhirendra Singh, Chairman & MD of Manpasand Beverages Ltd., said, “The coconut drink market in India is huge and most of it is catered to by the unorganized and non-branded segment. Not only is it a delicious and natural alternative to the aerated drinks available in the market, it also has multiple nutritional values. There is a huge market for branded packaged coconut drink like Coco Sip in the urban markets. After our flagship Mango Sip brand and the recent introduction of Fruits Up, this coconut drink Coco Sip is our next big and niche product launch.”
“Coco Sip will be made available through 1,000 modern retail stores and strategic tie-ups with select retailers. We also plan to deliver Coco Sip at consumers’ doorsteps through the e-commerce route. With consumers being more health conscious, there is a growing demand for healthier alternatives in the recent times,” added Mr. Singh.
With a “Make in India” vision, the company is the only Indian pure play Beverage Company. Its flagship brand ‘Mango Sip’ is based on Mango, India’s favorite fruit, and is highly popular in many parts of the country. After mango, the company plans to market many more coconut based products in the country starting from pure coconut water, and will bring out more fruit based healthy beverages in the coming days.

Baskin-Robbins to now offer Manpasand’s beverages
Baskin-Robbins, the world’s largest ice cream chain, will soon offer beverages in addition to ice creams across 250 of its parlours and outlets in India following a tieup with fruit juice maker Manpasand Beverages.
The duo has entered into a tie up whereby Manpasand’s mango-based ‘Mango Sip’ and ‘Fruits Up’ will be retailed at Baskin-Robbins outlets. “This is Baskin Robbin’s first association with a fruit beverage company,” said Sanjay Coutinho, CEO of Graviss Food Solutions, Indian franchisee of the US ice cream brand.
With this alliance, Manpasand’s flagship brand ‘Mango Sip,’ which is extensively spread out in rural and semi-rural regions, will now be available in urban areas through Baskin-Robbins outlets. After the phase one tie up for 250 outlets, the brand will spread out across all remaining stores of Baskin-Robbins, Manpasand chairman & managing director Dhirendra Singh said.

Manpasand Beverages PAT up 47.6% in Q4 FY 2015-16 at Rs. 25.54 crore Financial Highlights
India’s leading fruit drink player, Manpasand Beverages Ltd has reported a 47.6% rise in net profit at Rs. 25.54 crore for the fourth quarter ended March 31, 2016 as against net profit of Rs. 17.30 crore in the corresponding quarter of previous fiscal. Net sales for Q4 of FY 15-16 at Rs. 230.39 crore were higher by 90.9% over previous fiscal’s same quarter net sales of Rs. 120.65 crore. Earnings Per Share (EPS) for Q4FY16 was at Rs. 5.14.

For the 12 months ended March 2016, company reported a net profit of Rs. 50.56 crore against a net profit of Rs. 29.95 crore in the corresponding period last year, a growth of 68.8%. Net sales in FY 2015-16 at Rs. 556.70 crore were higher by 54.7% compared to Rs. 359.75 crore in the previous fiscal. EPS for FY 2015-16 was at Rs. 10.78.

Mr. Dhirendra Singh, Chairman & MD of Manpasand Beverages said, “Company’s flagship brand Mango Sip’s sales continue to grow at a fast pace and our new urban market focused Fruits Up brand is getting a very good response from consumers. Expansion plans including setting up of a new manufacturing facility in Haryana is under process. Modernisation of Vadodara and Varanasi facilities are completed.”

During the quarter, company entered into a tie up with German wholesale retail and trading major, METRO Cash & Carry and Ice cream chain Baskin-Robbins for distribution of Manpasand’s flagship mango-based brand ‘Mango Sip’ and recently launched ‘Fruits Up’ brand. Company is exploring more such tie-ups in coming days it is going to forge more such alliances to increase its urban market penetration.
In the coming years, the company aims to grow into a global beverage company with strong roots in India
Leading fruit juice player Manpasand Beverages Ltd is all set to make a mark in the ‘Make in India’ in Mumbai. It is showcasing ‘Fruits Up’ - a range of carbonated fruit drinks and premium fruit juices during the exhibition.

According to the company, the launch of the product is the realisation of prime minister Narendra Modi’s vision of adding fruit juices in carbonated drinks. Going forward, the company will launch more, healthy beverages in the market and tap in global markets with its innovative product range.

The prime minister had asked multinational cola companies to try and blend aerated drinks with at least 5% fruit juice to help distressed farmers find a new market for their produce. By doing so, he said, farmers will not be forced to dump their produce because of ‘un-remunerative’ prices and the country can save Rs 30,000-40,000 crore by reducing the wastage of food products through processing.

Speaking on the development, Dhirendra Singh, CMD, Manpasand Beverages, said, “With a modest budget at hand, we have dedicated ourselves to intense R&D to bring out healthier fruit drinks. It gives us immense pleasure that our company has been successful in introducing ‘Fruits Up.’It is a healthier option available in the carbonated beverage segment that uses fruit juice as a base compared to synthetic base used by cola giants.”

“The launch of “Fruits Up” is a humble yet proud realisation of prime minister Narendra Modi’s appeal made to beverage makers to augment fruit sales for Indian farmers by adding fresh fruit juices in carbonated drinks. In the coming years, the company aims to grow into a global beverage company with strong roots in India and launch more such natural and healthy beverages,” said Singh.

Under the brand, the company offers premium fruit juices as well as carbonated fruit drinks in different flavours. Premium fruit juices are available in mango, apple, guava, litchi, orange and mixed fruit flavours and contain 16-17% fruit pulp, while the carbonated fruit drinks are available in grape, orange and lemon flavours and offer 5-10% real fruit juice. In the coming days, the brand will be available across India through modern retail stores and major food chains.

As per the Euromonitor report, soft drinks industry in India grew at a CAGR of 23.8% by off-trade value in the period 2009-2014. The overall soft drinks market in India saw aggregate sales of over 20,000 million litre, worth Rs 65,330 crore in the year 2014. The report also suggests that total sale of carbonates in India in 2014 aggregated to 4,217.1 million litre worth Rs 22,640.2 crore, recording a growth of 9.4% and 12.6% by volume and value respectively in the year.

“The best part about the company is that the promoter is passionate about the business and is a big admirer of BM Vyas, the man credited with transforming the Gujarat Co-operative Milk Marketing Federation into a Rs.10,000-crore brand, Amul. The company has managed to get Vyas on board as a whole-time director,” http://www.outlookbusiness.com/specials/indias-best-fund-managers/compliant-risk-rider-2619

Dhirendra Singh in FORBES INDIA


KEY RISKS:–
MAP heavily depends on its mango based fruit drink “Mango Sip‟ product which contributed 87% of its net sales
A slowdown in economic growth in India could adversely impact MAP’s business.
The recent Nestle Maggie events highlight challenges in food packaging and labelling, and govt approvals. Compliance on these matters has to be ensured.
• There is intense competition in this category with the presence of MNCs and large Indian business houses in the drinks segments. MAP as a small player has to build its niche and not directly compete.

Disclosure:— invested.


(Priyaranjan Mahto) #2

Manpasand Beverages’ Expansion Plan
Manpasand Beverages, India’s leading fruit juices company, has drawn up aggressive expansion plans to increase its production facilities as well as significantly increase its distribution reach across the country, especially in rural and semi-rural regions. The company plans to invest over 100 crore in the next one year even as it continues its fast paced growth to take its sales to1000 crore in coming three years’ time. Manpasand Beverages has carved a niche for itself in the market with a basket of 25 product variants, with its first product Mango Sip becoming the fourth largest mango drink brand in India. The company has a strong presence in the tier-2 and semi-rural, and rural markets in India. Manpasand’s beverage brands are present in over 20 states and the company has manufacturing facilities at Vadodara in Gujarat, Varanasi in Uttar Pradesh and Dehradun in Uttaranchal. Dhirendra Singh, Chairman & Managing Director, Manpasand Beverages said, “We expect strong growth in the future as there is a huge opportunity in the packaged beverage market. We are expanding our manufacturing facilities as demand for our products far outstrips our existing capacities. Also, the beverages industry is expected to see 35 to 40 percent growth in the foreseeable future. In the next five years, we expect the size of the fruit drink industry to more than double.” link http://www.fmtmagazine.in/foodnews012014.html


(Bheeshma Sanghani, PhD) #3

its trading at a PE of 53. So even if its a great company with great future prospects, people should wait for it to be available at more realistic levels


(EL) #4

How exactly are we going to do that !


(Bheeshma Sanghani, PhD) #5

keep tracking it and most importantly wait


(Metrans09) #6

Im new to this. But here is my take.

Manpasand generated about Rs110cr of cash flows in FY16. Considering that it has fully repaid it debt and that its new plant in Haryana will start production in FY17, it can generate cash flow of Rs200cr in FY18. So in terms of cash flow yield it is available at just 10x!

There are hardly any pan-india beverage brands in the massive country of ours. The promoter is aggressive, there no leverage and expansion plans are on track, if one looks at the PEG it is less than 2.

The stock can get re-rated as more products hit the market and also penetration levels.

Regards


(Priyaranjan Mahto) #7

In this investors forum, giving price target is unacceptable. So, please avoid it… thanks…


(Priyaranjan Mahto) #8

Motilal Oswal initiated coverage on MANPASAND BEVERAGES LTD. http://www.motilaloswal.com/site/rreports/636026143928329820.pdf


(Rudra Chowdhury) #10

Thanks @rinkupranjan for starting the discussion.

Would like to understand what are the key reasons which would led Manpasand to sustain this high growth phase without major disruptions.

The MO reports lists the following for Mango Sip to gain traction :

  1. Company has around 75 SKUs for Mango Sip and Fruits Up put together, highest by any player in the market.
  2. MANB derives 40% of revenues from below 200ml size of SKUs, an area where competition like Maaza and Slice is not present.
  3. MANB provides higher distributor and retail margins to the tune of 35% v/s 22% for MNC players.
  4. MANB keeps the channel starving for products thereby generating pricing power.

The strategy of higher sales (40%) from smaller SKUs is counter intuitive as margins are inferior here. So at some point company needs to abandon this strategy for margin improvement.

MANB offers fruit drinks in small packs—small tetra packs (also known as tetra
classic aseptic) of 80–100 ml, and pet bottle and tetra pack of 160 ml—where global
competitors are not present. The segmental margins are inferior due to lower prices
> and proportionately higher costs, such as packaging, which discourages global giants like Coca Cola (Maaza) and Pepsico (Tropicana Slice). With Mango Sip, largely a rural focused drink, MANB’s offering at affordable prices (INR5 for 80–100 ml and INR10
for 160 ml) helps in acquiring customers and retaining them at a lower price point.

Again thus strategy of high sales traction (20%) through IRCTC is laden with risks. If IRCTC switches to inhouse/new brands they will find it difficult to find immediate traction for 20% of sales and coupled with expanded capacity from new plants might play spoilsport on margins.

The company has entered into tie-ups with IRCTC’s vendors for the supply of products
in trains and railway stations, and derives ~20–22% of sales through this channel. In
our opinion, the channel not only has a significant share in sales, but also acts as an
effective mode of communication and increases brand visibility.

Given that company is going through major capacity expansion, asset turns (will remain low) and working capital will remain elevated thus pressurizing ROE. So it is not fair to compare this with other FMCG peers who enjoy negative working capital and triple digit ROEs to justify the 50x P/E multiple.


(Priyaranjan Mahto) #11

VENTURA has initiated coverage on Manpasand Beverages Ltd. https://www.ventura1.com/WebAdmin/stockideas/636050344565545074_Initiating%20coverage%20on%20Manpasand%20Beverages%20Ltd.pdf


(Ravindra Mutyala) #12

Wow… Ventura is projecting earnings to FY19


(Ganesh12) #13

Hi,

This is a naive question, but isn’t projecting to FY19 sorta long? Like quite long :slight_smile:


(Priyaranjan Mahto) #14

Manpasand Beverages Ltd has reported a 82% rise in net profit at Rs. 28.64 crore for the first quarter ended June 30, 2016 as against net profit of Rs. 15.69 crore in the corresponding quarter of previous fiscal.

Total Income for Q1 of FY 16-17 at Rs. 236.91 crore were higher by 58% over previous fiscals same quarter total income of Rs. 150.11 crore.

Earnings Per Share (EPS) for Q1FY17 was at Rs. 5.72.

Dhirendra Singh, Chairman MD of Manpasand Beverages said, Our Companys aim is to grow aggressively across India and continue to delight customers with innovative, superior quality products at affordable prices.

With the introduction of Fruits Up, we had not only diversified our product portfolio but also adopted a new strategy to tap the urban markets, after having established a strong presence in the semi-rural markets through our flagship brand Mango Sip. During the year, we also developed another healthy product called Coco Sip - 100% Natural Packaged Tender Coconut Water, targeting the huge untapped coconut drink segment in India, said Singh.

The other new initiative we embarked on was to tie up with organised retail players as well as various food and beverage outlets such as Metro Cash Carry, Aditya Birla Retail, Havmor Ice Cream Cafeģ Coffee Day, to name a few. Manpasand also became the only beverage company to tie up with global ice cream major Baskin Robbins in India. In the coming months, the Company is going to forge more such alliances to increase its urban market penetration, he added.
http://www.newkerala.com/news/2016/fullnews-103260.html


(Dr. TarunDS) #15

Few issues with the stock

  • i can see the tax payment is not optimum (in the range of 9-11%)
  • cash flow is negative
  • dependent heavily on 1 customer ie IRCTC.
  • rising debt

Would love to know about these issues

Disclosure: Held a tracking position recently.


(Priyaranjan Mahto) #16

Annual Report 2015-16 released http://manpasand.co.in/wp-content/uploads/2016/08/ANNUAL-REPORT-2015-2016.pdf


(Priyaranjan Mahto) #17

Fruit juice player, Manpasand Beverages Limited, on Tuesday informed about completion of the work at the company’s new manufacturing facility at Ambala in Haryana.

The new facility, set up with an investment of around ₹ 160 crore, will contribute additional 45,000 to 50,000 cases per day to Manpasand’s existing capacity of 120,000-125,000 cases per day.

The company funded the investments through its initial public offer (IPO) in 2015.

Dhirendra Singh, Chairman & Managing Director, Manpasand Beverages said, “The facility will produce the entire range of Fruits Up drinks, carbonated and non-carbonated, along with our flagship brand, Mango Sip. From a strategic point of view, this facility will give us an upper hand in reaching out to markets in North and North-Eastern India.”

With the Ambala facility in near operational phase, Manpasand has now five manufacturing facilities located in various parts of India.

Two at Vadodara in Gujarat, one in Varanasi, UP, one in Dehradun, and the new one at Ambala in Haryana. The company is also planning to set up a new plant in South India in future.

http://www.thehindubusinessline.com/companies/manpasand-completes-work-in-new-manufacturing-facility-at-ambala/article9022205.ece?utm_source=RSS_Feed&utm_medium=RSS&utm_campaign=RSS_Syndication


(kaustubhkale) #18

Tax payment is low on account of the tax advantages that its high - in the fruit/food processing. Check the Motilal Oswal report link shared above. These advantages are expected to stay for the next few years atleast. Cash Flows are negative on account of its ongoing capex. Debt - infact i believe it paid off its entire long term debt recently, that was one of the objects of IPO.


(Priyaranjan Mahto) #19

With the Ambala facility in near operational phase, Manpasand has now five manufacturing facilities located in various parts of India: two at Vadodara in Gujarat, one in Varanasi, UP, one in Dehradun and the new one at Ambala in Haryana. Speaking about the completion of the new facility, Mr. Dhirendra Singh, Chairman & MD of Manpasand Beverages said, “The demand for our fruit juices under the Mango Sip and Fruits Up brands is so large that we need to continuously add new capacities to cater to this growing demand.
Manpasand Beverage ltd. is now eyeing national presence, and it is all set to enter the southern markets. The company is scouting for land in Andhra Pradesh and has already set up a team for the southern foray. As such it plans to expand capacities by 80 per cent over FY16 to FY18 with an estimated investment of about Rs 320 crore.
The company plans to enter the southern markets with its entire product range, starting from its flagship mango drink Mango sip to the latest launch Coco Sip. They are in the process of finalizing land for setting up a factory in Andhra Pradesh, and the overall project cost is estimated to be around Rs 150 crore.
The company already has 200,000 retailers, 2,000 distributors, over 200 super stockists, and plans to add 500-1000 distributors in the medium term with a special focus on south India where it has a low penetration.MBL will also be helped by the fact that Totapuri mangoes (it is 20 percent cheaper than other varieties and forms the base of all mango drinks) is grown in Andhra Pradesh, Tamil Nadu and Karnataka, and will be closer to the new plant.

The company turned debt-free in the fourth quarter of FY16 by repaying long term debt of Rs 100 crore from IPO proceeds. Singh said that for the proposed expansion, he was open to raise some debt or Equity if needed.
Dhirendra Singh, Chairman of MBL has 15 years experience in this industry. He is the also on the board for group entities like Manpasand Snacks and Beverages Ltd and Xcite Nutrition’s Private Ltd. MBL plans to use his ability to borrow to get into allied consumer businesses… In addition to packaged drinking water, Manpasand also plans to sell savouries. He can make use of the existing distribution network and sales outlets.

The consumption theme in India is very powerful, and will play out over the next few years as income and education levels improve. Within this overall consumption theme, the food segment stands out as both a daily essential as well as an aspirational category. Fruit based drinks is certainly a high potential consumption area with good prospects. Demand is likely to grow faster for fruit drinks than for colas and non-natural drink products.

MBL even with its niche rural and semi urban market, today faces intense competition, high costs of brand launches and planned capacity expansion. It may take another 2-3 years to have free positive cash flows from operations.

MBL’s most critical challenge, however, is still to come. As it pushes into larger cities, MangoSip will need to acquire the glitter of brand aspiration to take on the big players. Though the drink can be bought at train stations across Mumbai, customers still don’t see it as their first choice. The company will have to work at creating a brand pull. Singh is conscious of this fact and he knows that the brand is going to need significant advertising support.


(Rudra Chowdhury) #20

Thanks @rinkupranjan for your efforts, but this is not the response I was looking for.

Forget management commentary and expansion plans for a moment, ask this simple question

  • what is there that guarantees this sales demand ? If you have a crisp answer then next question would be how is this sustainable ?
  • is the company making sales for the sake of topline growth only ( compromising margins and free cash flow) ? what about disruptive competition ( skus/price points/ products)

Have you done any local scuttlebutt in terms of the product tastes and perceptions ? I do see huge potential for Coco Sip, however there aren’t any entry barriers and hence it can end up creating a market (bottled coconut water) which bigger brands can easily exploit.


(Priyaranjan Mahto) #21

Manpasand Beverages has emerged as the second highest selling mango drink across all SPAR hypermarkets in India :+1:. The brand is is available at all of SPAR’s 17 outlets spread across 9 locations in India.

The worldwide SPAR organisation comprises 12,000 stores in 40 countries on 4 continents and meets the needs of over 13 million consumers every day. SPAR hypermarkets and supermarkets in India is the result of a license agreement between the Dubai based Landmark Group’s Max Hypermarkets India Pvt. Ltd. and Amsterdam based SPAR International. SPAR customers have the option to choose from a wide variety of quality products in every category ranging from grocery to electronics and much more.

Elaborating on this achievement, Mr. Dhirendra Singh, Chairman & MD of Manpasand Beverages said, “Through this tie up, we have made further headway with our ‘urban penetration’ strategy. Since its inception, our Mango Sip brand has grown to become a well established and one of the largest selling fruit drink brands in semi-urban markets and small towns and cities. However, given the changing consumer preference for traditional and healthy fruit drinks in major urban markets we tied up with SPAR to make Mango Sip available in major cities like Delhi, Bangalore, Chennai, Pune, Hyderabad and others. Additionally, SPAR has helped us in growing our presence in South India where our penetration overall is still low. This and other such recent tie ups are only the beginning and we plan to enter into many more such tie ups in future so as to significantly increase our presence in urban markets in India.”

Speaking on the tie-up with Manpasand Beverages, Mr. Rajeev Krishnan, Managing Director & CEO, SPAR India said, “We are happy to have a leading fruit drink player like Manpasand Beverages onboard as it helps reinforce the organization’s promise to provide freshness, value and a differentiated choice to all customers. In about six months time, the ‘Mango Sip’ brand has become very popular with our customers and across all the SPAR outlets in India this brand has become the second largest selling mango drink.”

The market size of beverage industry in India, which consists of juices, carbonated drinks and bottled water is estimated to be worth around Rs. 65,000 crore and this market is estimated to grow at CAGR of more than 20%. The Indian packaged juice industry size is about Rs. 8,000 crore and it has been growing at more than 30% per annum in last few years and will maintain that pace in future as well. http://www.indiainfoline.com/article/news-top-story/manpasand-beverages-‘mango-sip’-brand-emerges-as-one-of-the-fastest-selling-fruit-drinks-at-spar’s-retail-outlets-116090300013_1.html