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¾ One-offs in A&P spends and Tax outgo impact performance,
APAT growth curtailed to 11% yoy to Rs591 mn
¾ Horlicks bounces back with volume growth of 16% yoy, but
MFD volume growth of 12% yoy…
¾ GSK has raised product prices by 8% on Boost portfolio
effective December 2011 and 4% on Horlicks portfolio
effective January 2012
¾ Maintain Earnings estimates for CY12E, Remains preferred
play within 3 themes in Consumer sector, Maintain
‘ACCUMULATE’ with target price of Rs 2,743
One-offs in A&P spends and Tax outgo impact performance, APAT
growth curtailed to 11% yoy to Rs591 mn
Performance for Q4CY11 was largely impacted by abnormal rise in expenditure (tax
outgo and A&P spends), despite healthy revenue performance. Revenues grew 18.6%
yoy to Rs 6.0 bn, meeting our expectations. Revenue growth was led by blended
volume growth of 11%, balance led by price increases and premiumization. However,
240 bps yoy increases in A&P spends keeps margins under pressure. This was led by
(1) re-launch of Boost during the quarter and (2) launch of Horlicks Oats in the quarter.
Hence, Ebidta margin declined 130 bps yoy to 10.2%, ahead of our expectation of
11.3% and Ebidta growth was curtailed to 5.5% yoy to Rs616 mn. Further, higher tax
outgo on prior period years curtailed APAT growth to 11% yoy to Rs591 mn, below our
expectation of Rs638 mn.
Horlicks bounces back with volume growth of 16% yoy, but MFD volume
growth of 12% yoy…
GSK Consumer reported an up tick in the Horlicks volume growth to 16% yoy during this
quarter versus 10% in Q3CY11. However, Boost recorded volume growth of 2% yoy,
lower then 6% yoy in Q3CY11. But, MFD volume growth at 12% yoy was in line with
expectations. This coupled with strong volume growth in exports and biscuits portfolio,
yielded blended volume growth of 11% yoy, in line with estimates. The contribution of
non-MFD portfolio was 7.0% of sales in the quarter.
Price hikes taken on MFD portfolio, Competition has followed suit….
GSK has raised product prices by 8% on Boost portfolio effective December 2011 and
4% on Horlicks portfolio effective January 2012. Last pricing actions were undertaken
on Horlicks portfolio in June 2011, average price rise were 7% therein. Hence, weighted
average price increase of 6% to flow in CY12E, resulting in strong value growth in MFD
portfolio.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
¾ One-offs in A&P spends and Tax outgo impact performance,
APAT growth curtailed to 11% yoy to Rs591 mn
¾ Horlicks bounces back with volume growth of 16% yoy, but
MFD volume growth of 12% yoy…
¾ GSK has raised product prices by 8% on Boost portfolio
effective December 2011 and 4% on Horlicks portfolio
effective January 2012
¾ Maintain Earnings estimates for CY12E, Remains preferred
play within 3 themes in Consumer sector, Maintain
‘ACCUMULATE’ with target price of Rs 2,743
One-offs in A&P spends and Tax outgo impact performance, APAT
growth curtailed to 11% yoy to Rs591 mn
Performance for Q4CY11 was largely impacted by abnormal rise in expenditure (tax
outgo and A&P spends), despite healthy revenue performance. Revenues grew 18.6%
yoy to Rs 6.0 bn, meeting our expectations. Revenue growth was led by blended
volume growth of 11%, balance led by price increases and premiumization. However,
240 bps yoy increases in A&P spends keeps margins under pressure. This was led by
(1) re-launch of Boost during the quarter and (2) launch of Horlicks Oats in the quarter.
Hence, Ebidta margin declined 130 bps yoy to 10.2%, ahead of our expectation of
11.3% and Ebidta growth was curtailed to 5.5% yoy to Rs616 mn. Further, higher tax
outgo on prior period years curtailed APAT growth to 11% yoy to Rs591 mn, below our
expectation of Rs638 mn.
Horlicks bounces back with volume growth of 16% yoy, but MFD volume
growth of 12% yoy…
GSK Consumer reported an up tick in the Horlicks volume growth to 16% yoy during this
quarter versus 10% in Q3CY11. However, Boost recorded volume growth of 2% yoy,
lower then 6% yoy in Q3CY11. But, MFD volume growth at 12% yoy was in line with
expectations. This coupled with strong volume growth in exports and biscuits portfolio,
yielded blended volume growth of 11% yoy, in line with estimates. The contribution of
non-MFD portfolio was 7.0% of sales in the quarter.
Price hikes taken on MFD portfolio, Competition has followed suit….
GSK has raised product prices by 8% on Boost portfolio effective December 2011 and
4% on Horlicks portfolio effective January 2012. Last pricing actions were undertaken
on Horlicks portfolio in June 2011, average price rise were 7% therein. Hence, weighted
average price increase of 6% to flow in CY12E, resulting in strong value growth in MFD
portfolio.
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