MANPASAND BEVERAGES LTD - Q4 FY 2018 RESULTS - A REVIEW

MANPASAND BEVERAGES LTD 

Q4 FY 2018 RESULTS - A REVIEW

As Investors are aware, Manpasand Beverages was going through a rough patch on the stock exchanges after the Auditor resigned. 

Investors feared the worst, after the Auditor resigned.Therefore, the Market price of Manpasand Beverages fell very rapidly and drastically.The fall was as much as 58% in one month duration.

The operational performance of Manpasand was fairly decent in the last 5 quarters and it had decent top line and bottom line both in all quarters. It had declared Bonus shares also 2 quarters ago - Sep / Oct,2017.

This took the Equity from Rs.57.22 cr to Rs.114.46 crores 

Yet, the EPS in Q4 now is 3.73 against 2.74 in the Q4 last year. Compared to Q3 EPS of 1.05, current EPS is highly impressive, even considering the seasonal nature of the Business. 

The company has declared huge expansions, which will double the production, sales and net profits within a short time.  The company is sure of great demand for its products. It is also coming out with several New products periodically. The capital works in progress has registered a huge increase to Rs.181 Cr against Rs.18 cr last year. Let us assume that this expansion will be completed efficiently and promptly.

It has excellent distribution chain all over India and is set to leave its foot print in all corners of India.

This blog will not make a specific BUY recommendation for any scrip as a policy. That decision is purely the decision of each Individual Investor. That said, every long term investor needs to consider the Management quality, their ambitions, the products of the company, the expansion plans, the investor friendliness of the Management and so on, in deciding on investing in the company. All these aspects seem to be reasonably good for Manpasand, right now. However, the company has declared a paltry dividend of 5% which is insensitive to the investors who lost a lot of their wealth in Manpasand.

Is it a Potential Multibagger? It could well be. Only the Future will tell. Stock Market is a place where you need to take some well reasoned risks and hope for good rewards in the future. Long term investment is not at all SPECULATION. But, it is a well reasoned Prediction of the future. That said, Future is future and  is never 100 % certain in its result.This game is therefore for people who can take such well reasoned risks.Any Business has these risks and rewards.

Now, Here are the Q4 results :

MANPASAND Mar'18 Dec '17 Mar '17 YOY QOQ Net Sales 384.76 143.13 273.41 40.73 168.82 Raw Materials 237.12 105.86 168.87 40.42 123.99 Traded Goods 3.29   -- 0.49 571.43  -- increase in Stocks -7.67 -18.9 6.27 -222.33 -59.42 Employees Cost 7.92 6.17 6.57 20.55 28.36 Depreciation 28.36 17.55 24.06 17.87 61.6 Other Expenses 71.14 23.27 33.25 113.95 205.72 profit before exceptional items 51.72 13.93 36.11 43.23 271.28 Other Income 8.18 5.3 8.52 -3.99 54.34 Interest 1.05 0.55 0.1 950 90.91 P/L Before Tax 51.72 13.93 36.11 43.23 271.28 Tax  9.02 1.94 4.77 89.1  364.95 Net Profit 42.74 11.99 31.34 36.38 256.46 Equity 114.46 114.46 114.46 57.22 100.03 0 EPS (FV RS.10) Basic EPS 3.73 1.05 2.74 36.13 255.24 Diluted EPS 3.73 1.05 2.74 36.13 255.24 MP 143 PE 9.58445

HIMADRI SPECIALITY CHEMICAL LIMITED FY 2018 EARNINGS CONFERENCE CALL JUNE,01,2018

HIMADRI SPECIALITY CHEMICAL LIMITED FY 2018

EARNINGS CONFERENCE CALL JUNE,01,2018

Ø MR.ANURAG CHOUDHARY is the CEO :Management quality has been generally very good, ambitious and efficient. But, they must show themselves more as Pro Retail Investor or Investor friendly, by declaring better dividends in future.

Ø Total Revenue in FY 18 is Rs. 1,971 crores, against Rs.1318 cr in FY 17 with a growth of 49% YoY. 

Ø EBITDA increased from Rs. 247 crores in FY 2017 to Rs. 450 crores in FY 2018 – due to higher capacity utilization, better product mix, operational efficiencies, focused marketing and increase in high-value-added products.

Ø NET PROFIT :- Tripled to Rs. 243 crores in FY 2018 from Rs. 81 crores in FY 2017.

Ø EQUITY : stands at Rs.41.84 cr

Ø DIVIDEND RATE : 10% (FV:RS.1)

Ø DILUTED EPS : at Rs. 5.8 against Rs.1.94 in FY 17

Ø NET DEBT has come down to Rs. 629 crores now, from Rs. 717 crores in FY 2017. 

Ø NET DEBT-TO-EQUITY RATIO is 0.43x. Repaid Rs. 500 crores of debt over last 5 years. Will continue with efforts to bring down the debt level. 

Ø NET DEBT-TO-EBITDA has come down to 1.4 times.

Ø NET WORKING CAPITAL is 31% of net sales from a level of 36% in FY 2017 and 55% in FY 2014 – due to various strategies in supply chain management and operational excellence.

Ø PRICE TREND : Himadri MP rose by nearly 100% from 70 to 142  over a one year period but has now fallen to 138. The volume of transactions on NSE is quite good at over 1 lakh generally, ensuring BUYs and SELLs easily.

Ø Company focus is clearly SPECIALITY CARBON BLACK and that is the niche area with high profitability.

Ø ADVANCE CARBON MATERIAL : 50 metric tonne capacity per month and COMPANY is running on full capacity.

Ø COAL TAR PITCH : end-user industries like aluminium and graphite electrode industries did well during FY 2018.

Ø ALUMINUM PRODUCTION in India is being ramped up through operationalization of existing capacity. Aluminium majors expect the strong ramping up of products and volumes to continue in FY 2019.

Ø GRAPHITE ELECTRODE INDUSTRY saw high capacity utilization of 80% during FY 2018, with an estimated utilization in high 80’s in FY 2019. 

Ø ANTI-DUMPING DUTY on SNF imports from China - with a positive impact on both volume and prices. Not on Naphthalene.

Ø REFINED NAPHTHALENE :Doubled capacity during the year, leading to high-value addition. volume is already 1,400 tonnes at full capacity currently. Over a period of time, we will be increasing this capacity further. 

Ø COAL TAR DISTILLATION : capacity will increase from 400,000 metric tonnes per annum to 500,000 metric tonnes per annum from Q3 FY 2019. It will come online after the annual shutdown in Q2.

Ø CARBON BLACK : due to focused marketing, led to sustainable volumes, better product mix, and better profitability for us, with the optimum capacity utilization of around 88%. 

Ø on the carbon black business, pricing is high in China also. So there is no chance of any dumping coming from China to India.

Ø ADVANCE CARBON MATERIAL : is operating at full capacity of 50 metric tonnes per month. Clearly 600 metric tonnes is achievable. But next full year, we will be having 5,000 metric tonnes capacity. We are supplying to 5 customers currently in different countries and in different segments. We will increase the number of customers, depending on the availability of material from our end.

Ø And Setting up capacity of 20,000 metric tonnes of ADVANCE CARBON MATERIAL over the next 2 years. 

Ø LITHIUM-ION BATTERIES : Current global demand is in excess of 200,000 tonnes for anode material per annum, which is growing at a CAGR of 30% to 40% per year.

Ø Here also additional capacities are being built up.

Ø SPECIALITY CARBON BLACK : Global market is in excess of 1 million tonnes per annum, primarily used in high-end rubber and non-rubber applications like plastics, fibers, inks, coatings, wires, and cables.

Ø NEW SPECIALITY CARBON BLACK : launched 10 new grades so far.

Ø Setting up a capacity of 60,000 metric tonnes in our facility at Mahistikry in West Bengal for non-rubber uses and tire speciality – to be ready by March 2019. Plan to launch 40 new grades of speciality carbon black in next 2 to 3 years.

Ø It wants to be among TOP 5 PRODUCERS of speciality carbon black globally in next 5 years. 

Ø For new product lines, capital expenditure is Rs. 600 crores in next 2 years funded through internal accruals with No equity dilution.

Ø Himadri,is creating multiple value-added products serving diverse industries like aluminum, graphite electrodes, tire, steel, rubber, construction chemical, agrochemical, infrastructure, power, plastics, inks, lithium-ion batteries, electric vehicles, etc. both in core and sunrise sectors of the economy. It is a one of its kind integration globally and Himadri has carved a unique speciality carbon play.

Ø It is confident of product quality, demand, prices and sustainability and very few competitors.

Ø Management is a visionary Management with lots of ambition and great plans and Great Execution capabilities.

Ø So will it be Potential Multibagger? It could be. Make your own calculations further. Make your decisions. A long term Investor must study facts and take his own decisions always. I wish you all the Best.

MANPASAND BEVERAGES - A REVIEW BEFORE Q4 RESULTS - INVESTOR PRESENTATION

MANPASAND BEVERAGES

Ø Manpasand Beverages is a fruit Juice manufacturer. It is India’s first listed pure-play beverage Company.

Ø It has had spectacular growth in the last 5 years. 

Ø Net Sales has increased from Rs.240 Cr in FY 13, to Rs.294 Cr in FY 14, to Rs.360 Cr in FY 15, to Rs.557 Cr in FY 16 to Rs.701 Cr in FY 17 – 3 times. 

Ø Net profits have increased impressively from Rs.22 Cr, to Rs.73 Cr.- 3 times 

Ø Dividend at 10% p.a. very Low. Manapasand has to improve.

Ø Equity has grown from Rs.2.5 cr to Rs.57.22 cr. 

Ø Reserves have grown from Rs.72 cr to Rs.1096 Cr.

Ø In first 3 quarters of the FY 18, the net sales amounted to Rs.564 Cr. So, it is quite likely to exceed last year”s Sales significantly by the addition of Q4 Sales.

Ø Net profit in first 3 quarters amounts to 57 cr.

Ø Q4 and Q1 quarters record heaviest sales and heaviest net profits generally in this  seasonal business. 

Ø Overall Annual sales and annual net profits are likely to be much better than last year.

Ø Shri. Dhirendra Singh, who has built one of India’s fastest growing fruit juices company. 

Ø It is focusing on segments which have been hitherto ignored by big players, covering the road less travelled. 

Ø Its beverage brands are present in over 20 states through more than 400,000 retailers, over 2500 distributors and 200 plus super stockists. 

Ø company has 7 operational manufacturing facilities: 3 at Vadodara , 2 at Varanasi and 1 each in Dehradun & Ambala. 

Ø 4 new manufacturing units coming up soon at Sri City etc.

Ø to double its production capacity in the coming 12 months and reach out to newer markets, especially in north-eastern and southern India and south Markets.

Ø Pricing can be a defining factor. 

Ø Real differentiator is the innovative taste and flavours based on consumer preferences.

Ø Innovation is a key driver. Manpasand has intensive R&D to bring out nutritious and healthier fruit drinks.

Ø Combinations of Fruits and Vegetable Juices; Local flavours

Ø High-speed PET bottle lines and tetra pack lines - at multiple locations to ensure delivery of round the clock. 

Ø desired standards of quality and food safety -  top priority.

Ø Its newest brand “Siznal” offers a range of innovative juices that are a blend of fruits and vegetables Plus honey. 

Ø It doesn’t contain any preservatives or added sugar. 

Ø bold flavours + nourishment + nutrition + taste.

Ø Its current Brands are : MANGOSIP, FRUITSUP CARBONATED, FRUITSUP JUICE, JEERASIP, APRILLA, ORS, SIZNAL,X-CITE, OXYSIP

Ø TIE UPs with Walmart, Aditya Birla Retail, Reliance Mart, SPAR,IRCTC,Parle,W H SMITH and RELAY For Airport space etc . 

Ø ‘MANGO SIP’ became one of the fastest selling mango based drinks at all Walmart India and SPAR India outlets. 

Ø AUDITOR QUITS : On May 27,Deloitte Haskins & Sells quit as  auditor, a few days before the declaration of annual results on May 30, due to lack of certain information to be provided by the company 

Ø Many mutual fund schemes seem to have exposure to the company.

Ø Ever since its auditor quit on May 27, some brokerages—have withdrawn their rating on the stock.

Ø WHY AUDITOR QUIT : No clear reasons are available for the Auditor quitting. From various media info, the company was doing well in the 4^th quarter and there was no cause for alarm on operational front. The company is erecting 4 New factories and therefore was not able to give some info to Auditor, to finish Auditing before May,30. But, Board scheduled its meeting on May,30^th,the last prescribed date, for considering AUDITED ACCOUNTS & DIVIDEND. Auditor refused to certify before May,30^th, without full Info. Therefore they quit. We still do not know full details.

Ø COMPANY CLARIFIES : ON June,6^th, company clarified that it has  not received any queries from SEBI or MCA. Deloitte was auditing for last 8 years, and never raised any concerns.

Ø NEW STATUTORY AUDITOR : M/s., Mehra Goel & Co, are appointed a as New Auditors. The final approval for accounts by the new auditor and Board meeting to further approve the same will happen in due course.

Ø SEBI has ordered additional surveillance measures due to the steel fall in the Market price etc.

Ø On May 31, stock exchanges released a list of 109 stocks on which additional trading curbs were to be imposed. 

Ø Sources say the market regulator will analyse trade data for the past few sessions to establish if any individuals or corporates made unlawful gains. Circuit filter is at 5%.

Ø Future of MANPASAND : The future of Manpasand appears to be quite safe, despite resignation of Deloite on some technical grounds unrelated to performance or materiality of info.

Ø BALANCE : Company must maintain all info above board in future. Its  performance seems to be OK. Its expansions schemes seem impressive. There is still scope for further expansion.