Company Report

Industry: FMCG

Manpasand Beverages
Sipping it Up

Amnish Aggarwal (amnishaggarwal@plindia.com) Gaurav Jogani (gauravjogani@plindia.com)

+91-22-66322233 +91-22-66322238
 Manpasand Beverages

Contents
Page No.
Manpasand - Play on Beverages growth in “BHARAT” .............................................. 4
Indian Soft Drink Market ............................................................................................ 5
MANB - 5% share in Rs72bn 25% CAGR juice drinks market ..................................... 6
“BHARAT” provides ample growth opportunities ...................................................... 8
Affordable and Innovative packs at Rs5/7 ......................................................................................... 9
Higher trade margins/ discounts and consumer promotions ......................................................... 10
Distribution focus on small towns, Parle Products* tie up to enable deeper penetration ............. 11
1.2x Capacity addition to power growth post FY18 ................................................. 13
Product Innovations to reduce seasonality .............................................................. 14
FRUITS UP - lack of capacity drags growth in CSD segment ............................................................ 14
Mutli Pronged distribution to aid sales growth ............................................................................... 16
GST; Fruits UP CSD has 38% realization advantage .................................................. 17
Celebrity endorsements/ promotions key to brand building................................... 18
Financial Summary; 1.2x capacity expansion to enable 35% sales CAGR
over FY17-20 ............................................................................................................. 20
Gross margins flattish, 60bps EBITDA margin expansion over FY17-20 .......................................... 21
Adj. PAT to grow at CAGR of 38.5% over FY17-20 ........................................................................... 23
Valuation Thesis: 30x FY20EPS, BUY with a target of Rs1009 ......................................................... 24
Key risks .................................................................................................................... 27
Annexure................................................................................................................... 28

Prabhudas Lilladher Pvt. Ltd. and/or its associates (the 'Firm') does and/or seeks to do business with companies covered in its research reports. As a result investors should be aware that
the Firm may have a conflict of interest that could affect the objectivity of the report. Investors should consider this report as only a single factor in making their investment decision.
Please refer to important disclosures and disclaimers at the end of the report

June 21, 2017 2

 Company Report
June 21, 2017
Manpasand Beverages

We initiate coverage on Manpasand Beverages (MANB) with a BUY rating and 18-
Rating BUY
Price Rs799 month target price of Rs1009 (26.3% upside). We estimate sales and PAT CAGR of
Target Price Rs1,009 34% and 38.5% over FY17-20 and value the stock at 30x FY20 EPS. MANB trades at
Implied Upside 26.3% significant discount to global majors on PEG (0.7x v/s 1.5-2.7x) and EV/EBIDTA
Sensex 31,298 (11.3x v/s 11.6-17.3x), which should narrow down in coming years as MANB
Nifty 9,654 improves its ROE from 7-8% to 13% by FY20.
(Prices as on June 21, 2017)
MANB mainly caters to the untapped growth opportunity in BHARAT (rural and
small town India) led by small packs (<Rs10, 40% of Mango Sip sales) and product
availability to capitalise on distribution gaps of majors like Coke, Pepsi and Frooti.
Trading data MANB is likely to grow at above market rates led by 1) 1.2x capacity expansion to
Market Cap. (Rs m) 45,715.7 370,000 cases/day 2) entry in new geographical regions in North, South and East
Shares o/s (m) 57.2 by setting up new units in TN, Odisha and Haryana 3) allocation of 40% of
3M Avg. Daily value (Rs m) 106.7 incremental capacity for fruit based carbonated drinks (Fruits Up CSD) and 4)
distribution expansion in modern trade and institutional segment (~25% of sales).

Major shareholders
MANB is increasing focus on “Fruits UP” (launched in 2014) in order to grow in
Promoters 44.14%
carbonated soft drinks segment and premium fruit based drinks. We note that
Foreign 21.20%
these are ~25% of sales despite lack of capacity and limited distribution.
Domestic Inst. 30.38%
Public & Other 4.28%
Concessional GST rates for fruit based beverages (12% v/s 40% for aerated drinks)
gives an advantage of Rs9.6/600ml which will enable the company to spend on
advertising, distribution and marketing in Rs200bn CSD segment dominated by
Stock Performance Coke and Pepsi. We estimate 81% sales CAGR in carbonated drinks over FY17-20.
(%) 1M 6M 12M
Absolute 0.8 47.5 46.0 Manpasand is driven by first generation entrepreneur (Mr. Dhirendra Singh) which
Relative (2.0) 28.5 29.5 increases key man risk, however we expect MANB to have additional systems and
processes in place as it scales up its operations to emerge as a pan India player.

How we differ from Consensus Key financials (Y/e March) 2016 2017 2018E 2019E
EPS (Rs) PL Cons. % Diff. Revenues (Rs m) 5,567 7,572 11,226 14,804
2018 17.9 13.8 30.2 Growth (%) 54.7 36.0 48.3 31.9
2019 25.4 20.0 27.3 EBITDA (Rs m) 1,104 1,398 2,128 2,830
PAT (Rs m) 506 724 1,024 1,452
EPS (Rs) 10.1 12.6 17.9 25.4
Growth (%) 26.7 25.2 41.5 41.9
Price Perf. (RIC: MANB.BO, BB: MANB IN)
Net DPS (Rs) 1.0 1.0 2.0 3.0
(Rs)
900
800
Profitability & Valuation 2016 2017 2018E 2019E
700 EBITDA margin (%) 19.8 18.5 19.0 19.1
600 RoE (%) 12.8 8.3 8.6 11.2
500
400 RoCE (%) 12.0 8.4 8.6 11.2
300 EV / sales (x) 7.2 6.0 4.0 3.1
200
100 EV / EBITDA (x) 36.2 32.6 21.3 16.1
0 PE (x) 79.1 63.2 44.6 31.5
Feb-17
Dec-16

Jun-17
Jun-16

Aug-16

Oct-16

Apr-17

P / BV (x) 6.6 4.0 3.7 3.4

Net dividend yield (%) 0.1 0.1 0.3 0.4
Source: Bloomberg Source: Company Data; PL Research
 Manpasand Beverages

Manpasand - Play on Beverages growth in “BHARAT”

Manpasand Beverages (MANB) is a play on growth opportunity in the cold beverages

segment in “BHARAT”. MANB focuses on small towns and Rural India, which are ~
70% of Indian population but are underserved by the large players. MANB is focused
on Mango Drink (Mango Sip) segment which is 85% of fruit drink market and is
worth Rs73bn. Mango Sip is 75% of sales while Fruits UP CSD and fruit based drinks
account for 23.7% of sales.

MANB has followed an aggressive marketing strategy, which involves 1) higher

distributor margins 2) small pack sizes (Rs5/10) 3) geographical expansion and 4)
brand ambassadors who have strong appeal in small towns and rural India.

MANB is undertaking multi-pronged approach to emerge as one of the key players in

the beverages segment. These include 1) New manufacturing units in East and South
India where it does not have presence 2) Introduction of differentiated fruit based
Carbonated drinks under Fruits UP brand and 3) Innovations like Fruits UP Juice
based drinks, Coconut water and Jira based drink to reduce seasonality.

MANB uses natural ingredients like Mango Pulp and fruit juices as its main inputs
which qualify it for lower taxes (12% under GST) in comparison to synthetic
concentrate based carbonated drinks (28%+12% cess in GST). Debt free balance
sheet, aggressive capacity and geographical expansion and product innovations
makes it a compelling play on the Beverages segment growth in India.

Exhibit 1: Mango Sip constituted 75% of Sales in FY17

FY17
Sales Breakup
Fruits Up CSD Others
11.6% 1.2%

Fruits up
12.1%

Mango Sip
75.1%

Source: Company Data, PL Research

June 21, 2017 4

 Manpasand Beverages

Indian Soft Drink Market

Soft Drinks
market
(Rs 524.3bn)

Off Trade market On Trade Market

(Rs 283.4bn) (Rs 240.9bn)

Carbonates Juices (Rs 101.3 Bottled Water

Others (Rs 17bn)
(Rs 104.3bn) bn) (Rs 60.8bn)

Juice Drink (upto 24% Fruit

content) Rs 73.6bn

Nectar (24%-99% Fruit

content) Rs 18.8bn

Juices Rs 9.1bn

 Indian soft drinks market is worth Rs524bn. Carbonated soft drinks are 47% of
the overall market while Juices are 26% and others (water, Coffee,
Concentrates, sports and energy drinks) are 27% of the market.

 Carbonated soft drinks have grown at 12.3% CAGR while Juices have grown at
26% and others at 27% CAGR over CY10-15.

 Off-trade (grocery stores, hypermarkets, super markets, roadside shops etc.)

sales are 60% of total sales while on-trade (food service outlets, restaurants,
bars, clubs, etc.) is 40% of sales for the overall market

 Carbonated drinks are 37% of the Off trade market while Juices are 36% and
bottled water is 21% of the market. Balance is accounted for by RTD segments in
Tea, Coffee, Concentrates, sports and energy drinks.

 Coke (Maaza, Minute Maid), Pepsi (Slice), Dabur (Real), Parle Agro (Frooti) are
the major players in the Juice and Juice based Drinks market in India.

June 21, 2017 5

 Manpasand Beverages

MANB - 5% share in Rs72bn 25% CAGR juice drinks market

MANB has just 5% market share in Rs72bn Juice drinks (pulp content <24%) in the
Mango segment. MANB mainly operates in the off trade Soft drinks market for juice
drinks and fruit based carbonated drinks. Juice drink market has grown to Rs72bn at
26% CAGR over CY2010-15 with a potential to grow to Rs127bn by CY2019. Mango
flavour drinks dominate the fruit based drinks with ~84% share; Lemon and Orange
have 5% share each.

Exhibit 2: Juice Drink market is expected to be Rs127bn by CY2019

Juice drink Nectar 100% Juice

140 127
120
100
80 72
56 54
60 44
34
40 27
21 17 20 18
11 15 10
20 6 3 8 3 5 6 8
0
FY10 FY11 FY12 FY13 FY14 FY15 FY19E

Source: Company Data, PL Research

Exhibit 3: Mango dominates the fruit based drinks Exhibit 4: Maaza, Slice and Frooti control ~50% of juice market

Juice Market Flavours Juice Market Share Maaza

Lemon (Coca-Cola)
Others
5.0 22.3
27.8
Orange
4.9
Mango Others
84.5 Tropicana Slice (Pepsi)
4.6 15.3
(PepsiCo)
Apple 8.9
1.0 Frooti Réal
(Parle) (Dabur)
12.1 13.6

Source: Company Data, PL Research Source: Company Data, PL Research

June 21, 2017 6

 Manpasand Beverages

Beverage majors like Coke, Pepsi and Frooti dominate the fruit drinks market due to
a variety of reasons like,

 Maaza and Slice ride on the depth of distribution of Coke and Pepsi as these
came to them through acquisitions

 Frooti has strength in modern trade and grocery channels

 Deep pockets required to create pan India bottling and manufacturing units
given high capital intensity and seasonal nature of business

 Huge advertising and sales promotional budgets act as an entry barrier for new
entrants

 Complexity of maintaining and running production lines in a seasonal business

Manpasand is aiming to grow faster than the industry by adopting following

strategies:

 Focus on underserved rural and small town market which is home to 70% of
population rather than taking BIG guys head on in the urban centres

 High growth in rural INDIA and small towns

 Affordable and innovative pack sizes starting at Rs5
 Higher discounts and promotions for trade and consumers
 Tie up with Parle Products to foster distribution in rural India and small towns
 Expansion in distribution in modern trade and Institutional sales

 Setting up manufacturing units across length and breadth of country

 Diversify into fruit based carbonate drinks and non-mango juice drinks

 Innovations like coconut water, Jeera Drink etc. in traditional drinks segment

 Brand building with celebrity endorsements

June 21, 2017 7

 Manpasand Beverages

“BHARAT” provides ample growth opportunities

~70% of Indians resides in small towns and rural areas, although it accounts for only
40% of the overall FMCG sales in India. BHARAT is estimated to contribute FMCG
sales of US$20 billion by 2018 and US$ 100 billion by 2025. Rural sales of juices have
grown by 26.3% CAGR over FY10-15 and are expected to increase from Rs132bn in
2015 to Rs417bn by 2020 led by:

 Underpenetration: Rural market is largely underpenetrated and Beverages

space is no different with the share of Rural markets at 1/3rd of Urban. In 2015,
rural India accounted for only 24.3% of the total off-trade volume sales of soft
drinks in India while it has 70% share of population in India.

Exhibit 5: Rural market was 21% of soft drink sales in FY10 Exhibit 6: Rural share in soft drink sales increased to 24.3% in FY15

Rural
Rural
21.0
24.3

Urban
Urban
75.7
79.0

Source: PL Research Source: PL Research

 Growing affluence: Rural economy is becoming more vibrant as the dependence

of cyclic agriculture to total rural incomes has come down significantly to ~30%.
Construction and factory Jobs, allied activities and small businesses are driving
the rural economy in a major way which will increase tendency of small impulse
purchases.

 Improved Infrastructure: Improved infrastructure like road connectivity and

electricity is improving the availability of packaged food and optimum conditions
to store and preserve the same thus boosting demand.

 Media influence: TV, Telecom and Internet have shrunk the world and exposed
small town and rural people to outside world. It has increased their aspirations
to look, feel and consume products on the lines of urban India.

June 21, 2017 8

 Manpasand Beverages

Manpasand is focused on the huge demand potential in rural India and small towns.
Manpasand which had started operations by testing and selling its Mango based
drink in small towns and rural areas of Bihar and UP remains focused on interiors of
the country, which remain relatively underserved by the BIG players in the Mango
drink market, i.e. Maaza, Slice and Frooti. Manpasand currently derives 55% of its
sales from rural areas and small towns and seems set to continue its growth journey.

Affordable and Innovative packs at Rs5/7

MANB is trying to doing what “Cavinkare” did to the Shampoo market when it
introduced Sachets. MANB’s “Mango Sip” has introduced small and affordable packs
sizes of 80ml, 125ml and 160ml pack priced at Rs5, Rs7 and Rs10. We note that while
Frooti has Rs5 and Rs10 pack, there is no competition at price point of Rs7. Slice and
Maaza don’t have Rs5/7/10 packs. Small packs give a huge head start in rural India
and small towns which have low pricing power as they induce consumer trials.

Exhibit 7: Mango Sip is the only brand with Rs7 pack in Mango based drinks
SKU (Rs) Mango Sip Frooti Mazaa Slice
Tetra pack
Rs5/80ml
75-80ml 5 5
125ml 7
160ml 10 10
200ml 15 15 14 12
PET
160ml 15
250ml 20 15
400ml 25
600ml 40 35 37 35

Rs10/160ml 1.2 ltr 67 62 64 65

Source: Company Data, PL Research

Exhibit 8: Mango Sip: <Rs15 packs are 58% of sales

Mango Sip SKU Mix - <Rs15 is 58% of sales

1.2 Liter
100/125ml
13%
19%

600ml
14%
Rs20/250ml

500ml
15%
160/200ml
39%

Source: Company Data, PL Research

June 21, 2017 9

 Manpasand Beverages

Small pack sizes enrol consumers into brand without coming in direct conflict with
big players like Maaza and Slice who control nearly 55% of market. Maaza and Slice
are one of the products for Coke and Pepsi and not their focus globally. In addition,
small packs have higher packing cost and lower margins in comparison to large packs
which is not remunerative for large players as they have franchisee led operations.
We note that less than Rs10 packs are ~40% of sales for MANB in FY2016. We
believe that such packs will have ready acceptance with on the go consumers and on
travel occasions and continue to record above industry average growth.

Higher trade margins/ discounts and consumer promotions

Retailers play a key role in an impulse category like Juices/drinks as the consumer
becomes brand agnostic at the time of need. We note that meaningful part of
consumption is in out of home segment during summer when the brand visibility
becomes an important issue. MANB follows an aggressive push based model to
recruit new distributors/ retailers and aggressive promotions for consumers.

 MANB offers trade margins of 30-35% in comparison to 20-25% margins paid by

others. Higher margins are a big incentive for retailers to push sales of MANB
products. Retailers also share a part of discount with consumers in rural areas to
push sales.

 MANB offers quantity incentives to trade to push sales during the peak seasons.
Such discounts are in kind like a Bike/ LED etc.

 MANB has tied up with Auto OEM to helps distributors in purchase of delivery
vehicles by providing guarantee of EMI to reduce their funding cost and
incremental discounts on the prices.

 MANB sells refrigerators to dealers, offering free Juice drinks worth 50% of the
refrigerator value to incentivise them for investment in refrigerator.

Manpasand offers 35% trade margins in

comparison to ~25% offered by other
established players

 MANB offers its bottled water Pure Sip as additional offering free of cost to the
distributors as incentive as the product is not being sold commercially.

 MANB is very aggressive in its consumer promotions to push sales, more so in

modern trade. We observe that “Mango Sip” receives a lot of sales push by
aggressive promotion schemes like Buy1 get 1 free etc. Although Frooti, Maaza
and Slice also offer modern trade specific discounts, MANB is more aggressive in
consumer promotions to generate more trials and acceptance.

June 21, 2017 10

 Manpasand Beverages

Distribution focus on small towns, Parle Products* tie up to enable

Parle Products is second largest player in deeper penetration
biscuits and is different from Parle Agro
which markets Frooti and compete with MANB has a direct distribution network of 208 consignee agents and 860
MANB’s Mango Sip distributors spread across 22 states. It’s overall distributor network consists of
500,000 retailers, 2000 distributors and 200+ super stockiest, it plans to increase it
by 500-1000 distributors every year by focusing on areas where its presence is
weaker.

Exhibit 9: Consignee agent and Distributors engages smaller super stockists and distributors

Manpasand
Beverages Ltd.

Consignee Agents Distributors

Super Stockist, Other

Distributor/Stockist,
Wholesale & Retailer

Source: Company Data, PL Research

MANB started marketing its products in UP and has good distribution in UP,
Maharashtra, Gujarat, Rajasthan, Haryana, Karnataka and Chhattisgarh. Although it
has presence in 22 states, lack of capacity and product availability has been a
constraint for growth and expanding distribution. Manpasand has not been able to
cater to demand in peak season which has limited its capacity to expand distribution.
Manpasand has huge scope to accelerate sales growth by distribution expansion:

 MANB has ~125 dealers in UP which have potential of 500 dealers. It will look at
increasing the number gradually, in line with the increase in capacity

 MANB has started creating initial footprint in Tamilnadu as it is looking is setting

up a 50,000 case/day unit in Sri City to cater to demand in southern states. It has
set up 300 distribution points in TN and is looking at selling 3-5 trucks/day.
Recent boycott of coke and Pepsi in TN has increased demand for its Fruits Up
CSD.

June 21, 2017 11

 Manpasand Beverages

 Parle Products Tie up positive as capacity moving up by 120% by 4QFY19:

MANB has announced a tie up with Parle Products which has ~33% market share
in Biscuits and has access to ~6.0mn retail selling points, mainly in the off trade
segment. MANB will make significant inroads into small towns and rural areas as
it has deep network. Salient features of the deal are:

 MANB will market its Mango Sip brand through distribution of Parle Products
MANB will gradually rollout Mango Sip
Gold in distribution network of Parle  The products will be sold under the brand “Mango Sip Gold” which has been
Products which spans ~6m retail outlets specially created for the Parle Products channel.

 Parle Products is looking at smaller SKU’s for small towns and rural areas
which can be bundled with its Parle G biscuits which have huge market at
price point of Rs2 and Rs5

 Manpasand will give distribution margins to Parle Product in line with

margins given to existing trade channels (~35% of sales)

 Manpasand will start supplying Mango Sip in one state and ramp up will
happen gradually.

We believe that trade acceptance (Parle Products distributors) and availability of

competitor’s products at existing retail selling points will be a key factor to watch out
for. We believe that success of this tie up will improve sales visibility given that
MANB is increasing capacity from 170,000 cases to 370,000 cases per day in another
couple of years.

June 21, 2017 12

 Manpasand Beverages

1.2x Capacity addition to power growth post FY18

MANB has a combined capacity of 170,000 cases/day across plants in Vadodara,

Varanasi, Dehradun and Ambala, it is planning to increase capacity to 370,000
cases/day by end of FY19. MANB faces capacity shortage during the peak season
even as it has increased its capacity from 65,000 cases to 170,000 cases in past 2
years. It is catering to the Western and the Southern market through its Vadodara
plant, North and Northeast market through Varanasi and Ambala plant.

It currently has 5 units and estimates the requirement of 40-45 manufacturing units
to cater to the length and breadth of the country. MANB is therefore planning to
step up 4 new units, each with capacity of ~50,000 cases/day. While Varanasi and
Vadodara units will be operational by the end of FY18, Sri City (A.P) unit will start by
1QFY19 (will cater to demand in South India). Location for the 4th plant is yet to be
finalised, however it is slated to come up in the eastern part of India.

Exhibit 10: MANB’s Capacity to increase from 170,000 to 370,000 cases/day by 4QFY19
Unit Tetrapack PET Completion Status
Vadodara 1 8,333 10,000
Varanasi 20,000 20,000
Vadodara 2 10,000 40,000 Apr-15
Dehradun 0 5,000
Ambala 10,000 40,000 Aug-16
Construction on, completion by
Vadodara3 11,000 40,000 Jan-18
end FY18
Construction on, completion by
Varanasi 2 12,000 40,000 Mar-18
end FY18
Land acquired, completion by
Sri City (A.P) 12,000 40,000 Jun-18
1QFY19
East India 12,000 40,000 Jan-19 Land yet to be finalised
Total 95,333 275,000

Source: Company Data, PL Research

MANB has entered carbonated fruit drinks under the brand fruits up, however sales
are limited given capacity constraints. In order to improve the availability, new units
will have 60% capacity of Mango Sip and 40% for Fruits Up carbonated.

New units will increase the addressable market and reduce the risk of regional
concentration. MANB has a market share of ~5% in Mango drink segment, new units
will enable the company to increase its market share to 8%+ by the end of FY18.

June 21, 2017 13

 Manpasand Beverages

Product Innovations to reduce seasonality

MANB flagship product is “Mango Sip” which is a Mango based fruit drink with pulp
content of 12-14%. Mango Fruit drink is a seasonal product and most of the
consumption happens during the summer season, especially during “Feb to July”.
We estimate that 1Q and 4Q account for 70% of sales for MANB while 30% comes in
2Q and 3Q. Consequently, the units operate at low capacity for considerable periods.
MANB has ventured into Carbonated and other fruit drinks under fruits up brand,
Manpasand ORS, Coco Sip (Coconut water), Pure Sip (Bottled water) and Jeera Sip.

FRUITS UP - lack of capacity drags growth in CSD segment

MANB launched “FRUITS UP” in July 2014 under two offerings 1) carbonated fruit
drink and 2) premium fruit drink in 5 flavours. “Fruits up” CSD has a feel of Thumps-
up, Fanta and Sprite, with 8-10% fruit juice rather than synthetic concentrates.
“Fruits up” fruit drink is a premium drink with fruit content of ~16-17% in 5 flavours
(orange, Litchi, Mango, Guava and mixed fruits) targeting urban markets.

Exhibit 11: Fruits Up has presence across Fruits drink and Carbonates
Fruit Drink Carbonated Fruit Drink
Tetra Pack 100ml and 200ml NA
PET Bottle 125ml, 160ml, 300ml, 600ml 250ml and 300ml
Can NA 250ml
Mango, Apple, Litchi, Guava,
Flavours Grapes, Orange, Lemon
Orange, Mix Fruit
Source: Company Data, PL Research

June 21, 2017 14

 Manpasand Beverages

Fruits Up CSD aims at creating a niche in carbonated soft drinks (CSD) market given
its unique proposition of offering a fruit juice based product. Fruits Up drink is aimed
at making inroads in the premium end of urban markets. MANB believes that with
real fruit content in its CSD it will be able to outscore its competition where the
drinks contain artificial flavours, Caffeine and synthetic formulations. ‘Fruits Up’ has
seen good consumer traction and clocked sales of Rs 1.8bn in FY17, with CSD
growing by 66% to Rs880m. MANB currently has a capacity of 30-35k cases/day for
CSD which is limiting its growth. It has plans of having 20,000 cases/day capacity
dedicated for CSD in new units which will significantly scale up Fruits Up CSD
capacity to ~100,000 cases per day over coming 2-3 years.

Manpasand ORS: It is positioned as a fruit drink with energy replenishing attributes

with ~10% fruit content and rehydration salts. It is focused on the relatively under
penetrated North East Indian market. It is available in apple and orange flavours in a
single 200ml Tetra pack with Mary Kom (Female boxer) as its brand ambassador.

Pure Sip: commercial launch looks unlikely: Manpasand distributes bottled water
under Pure Sip brand selectively as a part of trade schemes along with Mango SIP to
distributors. It is thus testing water and creating brand. However, it does not have
plans to launch bottled water in the medium term.

COCO sip and Fruit/ veg based drinks: MANB had introduced Coconut water in
packaged form in May 2016 in select non-south markets in 200ml pet bottle. It
seems that the company will be gradually increasing the sale of Coco sip as it is
trying to adjust the price points and packaging for the product. Manpasand has also
plans of launching health based drinks combining goodness of Fruits and Vegetables.

Jeera Sip: It has recently announced the launch of “Jeera Sip” which marks its entry
to the traditional Indian drinks segment. MANB has added Real fruit “Apple
concentrate” and fizz to give it a modern twist while keeping the traditional flavour
of cumin alive.

We believe that Fruits UP offers significant scope to scale up operations and sales in
the coming years. Coco Sip and Jeera Sip are niche products while it is yet to plan for
scaling up the Pure Sip business.

June 21, 2017 15

 Manpasand Beverages

Mutli Pronged distribution to aid sales growth

MANB has focused on the rural and semi urban markets, but it is also expanding in
institutional segment and emerging channels like Modern trade, online retail and
Café/ Restaurants. We note that Modern trade and Railways are more than 25% of
Mango Sip sales even as Fruits UP is available only selectively in these channels.

Indian Railways: MANB derives ~20% sales from Indian Railways. It is an approved
supplier to railways and sells to the “IRCTC” approved vendors for supply in trains
Indian Railways is 20% of MANB sales with and on shops in stations. MANB currently caters to Western, North Western and
focus on west, north west and south west South Western Railways. In addition to Mango Sip, Fruits up is also getting listed and
region approved in Railways which will sustain growth in Railways distribution channel.

Modern Retail: Modern retail is 5% of MANB sales. Its products are available across
major retailers like Big Bazaar, D-mart, More, Easyday, Reliance Fresh, HyperCity,
Spencer’s, Heritage and Star Bazaar etc. MANB has been adopting aggressive
discounts (Buy 1 get 1 free) on Mango Sip to increase visibility in Modern Retail.

Mango Sip and Fruits Up are available in QSR’s and Restaurant Chains: MANB has tied up with QSR’s like Baskin Robbins,
leading stores like Bib Bazaar, D-Mart, Costa Coffee, Barista, Havmor & Goli vadapav to sell its products through their
More, Easyday, Reliance Fresh, Star outlets. Such tie-ups increase the visibility of brand in relevant consuming class
Bazaar, HyperCity and Spencer’s ensures captive business and lowers marketing spend.

Online retail: MANB is also consolidating its presence in online retail, given rising
share of online in urban centres. Mango Sip is available on leading online grocery
portals like Big Basket, Grofers etc. where it is being promoted on lines of modern
trade. However, “Fruits up” CSD is selectively listed in online retail; however
availability is low given the capacity constraints.

Vans for supplying Fruits up: MANB has adopted a differentiated distribution
strategy for its Fruits-up brand. It has appointed 40-50 distributors who will supply
the Fruits up brand through Vans and innovative schemes. It has launched a scheme
with leading original vehicle manufacturers (Mahindra, Piaggio and Atul) in the state
of Gujarat to provide vehicles to distributors of “Fruits Up” on easy financing. In
addition, MANB provides 15% margin to the distributors on sales of Rs0.2mn/month
to cover his overhead expenses and ensure good profit. The van linked model is
expected to see fast scale up in the coming years.

June 21, 2017 16

 Manpasand Beverages

GST; Fruits UP CSD has 38% realization advantage

MANB uses fruit juice as for flavour in its carbonated drinks in comparison to usage
of synthetic flavours in Coke, Pepsi, Thumbs Up, Miranda, Fanta, Sprite and Limca
which makes it eligible for concessional GST rate.

 39% realisation advantage with Fruits UP CSD due to GST: CSD (Carbonated
Fruits Up Carbonated will attract only 12%
Soft Drinks) are included in the category of demerit goods under GST. They will
GST as against 40% for aerated drinks like attract a GST of 28% and cess of 12%. CSD had excise of 18% with 42%
Coke, Pepsi, Fanta, Mirinda, Thumbs Up abatement and 25% VAT earlier. However, as Fruits up CSD has ~10% fruit juice,
etc. it will attract 12% GST rate giving it an advantage over traditional colas. We
estimate that for 600ml bottle of Fruits up and Coke/ Pepsi the difference in
taxes would be Rs9.6 and ex-factory realisation higher by 39.1%. This will
provide enough headroom to MANB to spend on brand building; marketing and
additional incentives to trade to compete with Coke and Pepsi.

Exhibit 12: Lower GST rate on Fruits UP gives ~Rs9.7/600ml advantage to MANB
600ml pack Coke/ Pepsi Fruits UP CSD
Amount in Rs GST Rate 28%, Cess 12% GST rate 12%
Ex Factory Price 16.8 23.3
GST 30% 5.0 7% 1.6
Superstokist Cost 21.8 24.9
Profit Margin 3.6% 0.8 5% 1.2
GST 40% 4.0 12% 1.5
Distributor price 26.6 27.7
Profit Margin 7% 1.9 10% 2.8
GST 40% 2.4 12% 0.5
Retailer Cost 30.8 31.0
Profit Margin 14% 4.4 20% 6.2
SP 35.3 37.2
GST 40% 2.7 12% 0.8
MRP 38.0 38.0
Total GST Rs 14.1 4.5
Ex Factory Diff 39.1%

Source: Company Data, PL Research

 Mango Sip and Fruits up juice drinks: MANB’s fruit drinks like Mango Sip and
Fruits Up currently attract 2% excise duty and 5% VAT. The fruit based drinks will
attract GST at the rate of 12%. Thus the tax incidence will increase by 5% from
current levels. However the company will start getting the input tax credit on
ingredients which will neutralise the impact of higher GST rate resulting in flat
rates for fruit drinks.

 GST impact in FY18: GST will impact the sale of most segments in consumer
goods in the coming quarters. There is expected to be some trade de-stocking
ahead of GST. However impact on MANB will be minimal given that 70% of sales
happen in 4Q and 1Q and sales happen through small shops which would not be
required to pay GST or maintain books of accounts.

June 21, 2017 17

 Manpasand Beverages

Celebrity endorsements/ promotions key to brand building

Brand building has been a key focus area for MANB, although it has not been an
aggressive advertiser. MANB is short of capacity during peak season and advertising
adds to dealer discontent due to non-availability of products. Manpasand has
followed innovative advertising strategy keeping in mind the product positioning and
geographical availability. As Manpasand owns its brands, advertising creates long
term brand value without any royalty charge.

 MANB has appointed Sunny Deol as brand ambassador of Mango Sip. This fits
well with the brand imagery and focus on tier2/3 cities and rural areas.

 MANB has appointed Taapsee Pannu as brand ambassador for Fruits up. The
company is trying to create a differentiated position by taking an emerging
youth icon and advertising indicating change in trend. This is in line with the
product positioning of carbonated drink with natural juice content.

June 21, 2017 18

 Manpasand Beverages

 MANB branding strategy includes trade promotional initiatives like schemes to

distributors and retailers to purchase cooling accessories such as fridges,
iceboxes and carts at discounted prices. These accessories in turn helps in point
of sale advertising and brand recall.

 MANB has increased spending on advertising and promotions from 4.5% of sales
in FY13 to 11.6% of sales in FY15 and currently it stands at ~10% of sales. We
expect adpro to stabilize around 9% of sales.

Exhibit 13: MANB A&P (% of sales) has peaked out

A&P (Rs m) % of sales (RHS)

2000 1785 14.0

11.6 12.0
9.9 11.1 1451
1500
10.0 9.8 9.8 10.0
1123
8.0
1000 7.4 841
6.0
550
4.5 418 4.0
500
219
108 2.0
0 0.0
FY13 FY14 FY15 FY16 FY17 FY18E FY19E FY20E

Source: Company Data, PL Research

June 21, 2017 19

 Manpasand Beverages

Financial Summary; 1.2x capacity expansion to enable 35%

sales CAGR over FY17-20

Manpasand has a capacity of 170,000 cases/day which will increase by 120% to

370,000 cases/day by 4QFY19 as the new proposed plants in Varanasi, Vadodara, Sri
City and Odisha are on stream. We estimate 30% CAGR in volumes led by higher
capacity and entry in new regions in South and eastern India. We also factor in
calibrated price increase of 4-5% which would enable 35% sales CAGR over FY17-20.

Exhibit 14: 30% CAGR in volumes to enable 35% sale CAGR over FY17-20

Volume growth Realization growth (RHS)

80.0 72.2 25.0

20.1
70.0 20.0
60.0 15.0
10.0
50.0 43.1 5.0 42.3 5.0 4.0 4.0
5.0
40.0
26.8 0.0
30.0 27.2
19.7 -5.0
20.0 -10.1 -10.0
10.0 -15.5 4.1 -15.0
0.0 -20.0
FY14 FY15 FY16 FY17E FY18E FY19E FY20E

Source: Company Data, PL Research

Exhibit 15: Capacity utilization to dip with fast expansion, to improve post FY18
Capacity/ production (cases/Day) FY14 FY15 FY16 FY17 FY18 FY19 FY20
Installed Capacity 56,667 65,000 99,460 170,000 270,000 320,000 370,000
Production 30,006 32,670 56,270 71,585 101,850 129,100 154,500
Growth (%) 36.7 8.9 72.2 27.2 42.3 26.8 19.7
Capacity Utilisation (%) 53.0 50.3 56.6 42.1 37.7 40.3 41.8

Source: Company Data, PL Research

“Mango Sip” accounts for ~75% of sales and is likely to grow at 29% CAGR. However,
we estimate 62.7% sales CAGR in Fruits Up as new units will have 40% capacity
dedicated to carbonated soft drinks. Higher growth in Fruits UP will reduce the
contribution of Mango Sip to 58% while the share of Fruits Up will increase from
23.7% to 40.9% led by 86% CAGR in sales of CSD over FY17-20.

June 21, 2017 20

 Manpasand Beverages

Exhibit 16: Brand-wise Sales Breakup (Rs m)- Fruits Up CSD to lead sales growth over FY17-20
FY14 FY15 FY16 FY17 FY18 FY19 FY20
Mango Sip 2,850 3,069 4,410 5,690 7,656 9,153 10,661
YoY gr. 21.6% 7.7% 43.7% 29.0% 29.0% 29.0% 29.0%
% of total sales 96.9% 85.3% 79.2% 75.1% 68.2% 61.8% 58.2%

Fruits Up 12 376 1,080 1,793 3,457 5,510 7,488

YoY gr. - 187.5% 66.0% 92.8% 59.4% 35.9%
10.4% 19.4% 23.7% 30.8% 37.2% 40.9%
Fruit Drink 282 550 913 1,278 1,726 2,243
YoY gr. - 95.2% 66.0% 40.0% 35.0% 30.0%
% of total sales 0.0% 7.8% 9.9% 12.1% 11.4% 11.7% 12.2%
Carbonated Drinks 12 94 530 880 2,179 3,785 5,244
YoY gr. 88.1% 716.0% 464.3% 66.0% 147.6% 73.7% 38.6%
% of total sales 0.4% 2.6% 9.5% 11.6% 19.4% 25.6% 28.6%

Other Fruit Drinks 11 146 71 81 104 130 151

YoY gr. -54.4% 1186.9% -51.5% 14.7% 27.6% 25.3% 16.4%
% of total sales 0.4% 4.1% 1.3% 1.1% 0.9% 0.9% 0.8%
Manpasand ORS 137 61 70 89 111 128
YoY gr. -55.6% 15.0% 27.0% 25.0% 15.0%
% of total sales 0.0% 3.8% 1.1% 0.9% 0.8% 0.8% 0.7%
Other Fruit drinks 11 9 10 11 15 19 23
YoY gr. -54.4% -22.7% 13.9% 13.0% 31.0% 27.0% 25.0%
% of total sales 0.4% 0.2% 0.2% 0.1% 0.1% 0.1% 0.1%

Traded Goods (Refrigerator & Ice Box) 69.8 6.6 6.0 7.2 8.7 10.8 12.4
YoY gr. 160.6% -90.6% -7.9% 20% 20% 24% 15%
% of total sales 2.4% 0.2% 0.1% 0.1% 0.1% 0.1% 0.1%

Gross Sales (net of excise duty) 2,943 3,597 5,567 7,572 11,226 14,804 18,313

Source: Company Data, PL Research

Gross margins flattish, 60bps EBITDA margin expansion over FY17-20

MANB’s major raw materials are Mango Pulp, Sugar (each 14.5% of sales) and
Packaging cost (Preform and Laminates, 28.5% of sales). Sugar has seen sharp surge
in prices and is up by 33.5% YoY in FY17, while packaging cost (~ 28.5% of sales) has
remained benign in FY17 and is down by 2.9% YoY. We estimate a decline of 20bps in
gross margins over FY17-20, as MANB will focus on higher sales promotions for
brand building in a price sensitive and highly competitive consumer segment.

June 21, 2017 21

 Manpasand Beverages

Exhibit 17: Sugar prices are up by 33.5% YoY in FY17 Exhibit 18: HDPE prices are down by 2.9% YoY in FY17
4,200 3,870 120 114.3
3,835 110
3,660
3,700 100 89.4
3,585
(Rs / Quintal)

3,295 90 89.4
79.8 90.4
80 85.4 83.4
3,200 3,095 70 72.3
3,290 60
2,700 50
40 47.9
2,695 30
2,200

Aug-08

Jul-11

Aug-15
Oct-09

Oct-16
May-10

Nov-13
Apr-13
Feb-12
Sep-12
Jan-08

Jan-15
Mar-09

Mar-16
Dec-10

Jun-14
Jan-13

Jan-14

Jan-15

Jan-16

Jan-17
Jul-13

Jul-14

Jul-15

Jul-16
Oct-12

Oct-13

Oct-14

Oct-15

Oct-16
Apr-13

Apr-14

Apr-15

Apr-16

Apr-17
Source: PL Research, Bloomberg Source: PL Research, Reliance

Exhibit 19: Per Case Economics (Rs/case) – GM/ case to improve by 5%, 7% higher overheads to result in flattish EBIDTA/case
FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20
Sales/case 300.7 266.0 305.3 274.5 288.2 302.7 314.8 327.4
Raw Materials/ Case 151.7 166.3 174.3 166.8 164.3 175.9 192.5 198.4
Growth 9.6% 4.8% -4.3% -1.5% 7.0% 9.4% 3.1%
Mango Pulp 17.5 29.3 40.4 39.7 36.5 34.5 32.8 32.3
Sugar 33.3 34.5 36.1 34.9 38.8 47.1 49.5 52.0
Preform 26.7 28.8 27.7 26.9 28.6 30.8 44.7 46.8
Laminate 34.2 36.5 35.4 33.6 30.3 31.8 32.7 33.7
Others 40.1 37.2 34.6 31.7 30.2 31.8 32.7 33.7
GM/ Case 149.0 99.7 131.0 107.7 123.9 126.8 122.3 128.9
Operating Expenses 67.8 70.5 73.3 59.6 67.4 67.7 70.2 72.8
EBIDTA/Case 81.2 29.2 57.7 48.1 56.5 59.1 52.1 56.2

Source: Company Data, PL Research

We estimate increase in GM/case from Rs123 in FY17 to Rs128 in FY20. EBIDTA /case
is expected to remain flattish at Rs56.2 in FY20 (Rs56.5/case in FY17) due to higher
increase in overheads and initial drop in capacity utilization due to more than 120%
increase in capacity in next 24 months.

June 21, 2017 22

 Manpasand Beverages

Exhibit 20: EBIDTA margins to expand 60bps over FY17-20

Gross margins EBITDA margins

45.0
40.0
41.4 41.8 41.5 41.4 41.1 41.2 41.2
35.0
30.0
25.0
20.0
15.0 19.8 18.5 19.0 19.1 19.1
17.8
10.0 15.5
5.0
0.0
FY14 FY15 FY16 FY17E FY18E FY19E FY20E

Source: Company Data, PL Research

Adj. PAT to grow at CAGR of 38.5% over FY17-20

We expect Adj. PAT to grow at CAGR of 38.5% over FY17-20 with 35% CAGR in Top
line. MANB has raised Rs9.5bn in IPO and QIP which will enable it to remain net cash
positive. We expect MANB to turn FCF positive in FY19 as the cash flows improve
and capex peaks. 92% increase in financial other income from Rs176mn in FY17 to
Rs336m in FY20 will enable 38.5% PAT CAGR despite 123% increase in depreciation
from Rs738m to Rs1.64bn by FY20.

We expect the Tax rate to remain around 12% during FY17-20 as MANB is eligible for
deduction in income tax under section 80(IB) of the income Tax Act, 1961 since it is
in the business of processing, preserving and packaging of fruits.

Exhibit 21: MANB gets Section 80IB 11A benefit which entitles it to 100% tax rebate for first 5 years and 30% for next five years
% Tax Rebate (Unit wise) FY12 FY13 FY14 FY15 FY16 FY17E FY18E FY19E FY20E
Vadodara1 100 100 100 100 30 30 30 30 30
Varanasi 100 100 100 100 100 30 30 30 30
Vadodara2 N.A N.A N.A N.A 100 100 100 100 100
Ambala N.A N.A N.A N.A N.A 100 100 100 100
Vadodara 3 N.A N.A N.A N.A N.A N.A 100 100 100
Varanasi 2 N.A N.A N.A N.A N.A N.A 100 100 100
Sri City N.A N.A N.A N.A N.A N.A N.A 100 100
Orissa Jharkhand N.A N.A N.A N.A N.A N.A N.A N.A 100

Source: Company Data, PL Research

June 21, 2017 23

 Manpasand Beverages

Exhibit 22: 38.6% PAT CAGR led by 36% CAGR in EBIDTA and 92% higher other Income
Y/e March (Rs m) FY16 FY17E FY18E FY19E FY20E
Sales 5,567 7,572 11,226 14,804 18,313
YoY gr. (%) 54.7 36.0 48.3 31.9 23.7
Gross Profit 2,312 3,136 4,610 6,095 7,542
Gross margin (%) 41.5 41.4 41.1 41.2 41.2
EBIDTA 1,104 1,398 2,128 2,830 3,495
EBIDTA Margin (%) 19.8 18.5 19.0 19.1 19.1
Growth % 72.2 26.7 52.1 33.0 23.5
PBT 567 824 1,163 1,650 2,186
Tax 62 101 140 198 262
PAT 506 724 1,024 1,452 1,924
PAT Growth (%) 68.8 43.1 41.4 41.9 32.5
EPS (Rs) 10.1 12.6 17.9 25.4 33.6
EPS Growth (%) 26.7 25.2 41.5 41.9 32.5
P/E (x) 76.9 61.4 43.4 30.6 23.1
EV/ EBIDTA (x) 34.4 28.7 19.2 14.3 11.2
EV/ Sales (x) 69.9 58.7 39.6 30.0 24.3

Source: Company Data, PL Research

Valuation Thesis: 30x FY20EPS, BUY with a target of Rs1009

MANB is expected to increase its market share from current levels of 5% in 2016 to
8%+ by the end of FY2019 in the Fruit juice market as it gradually establishes itself as
a pan India player. MANB has multiple growth drivers like 1) focus on low
penetration rural areas and small towns 2) 1.2x increase in capacity over the coming
24 months 3) scope to increase sales by geographical expansion and 4) entry into
innovative products like Fruits UP CSD. We estimate 34% sales CAGR and 38.5% PAT
CAGR over FY17-20. Higher than expected success of Fruits Up can take the growth
rates to higher than estimated levels. We expect gradual improvement in ROE and
ROCE as the benefits of ~Rs9bn capital infusion get reflected in higher sales and
profits in coming years.

MANB is trading at 14.4x and 11.3x FY19 and FY20 EV/EBIDTA which compares
favorably with global majors like Coke, Pepsi, Monster Beverages and Dr. Pepper etc
which are trading at 15-50% premium. MANB is trading at 0.7xFY20 PEG which is at
significant discount to global majors which are trading between 1.7-2.5PEG.
Although their ROE is much superior, MANB’s higher growth in the medium term will
gradually improve the return ratios. We initiate coverage with Buy and value the
stock at 30x FY20 EPS and arrive at 18month price target of Rs1009, a 26.3% upside.

June 21, 2017 24

 Manpasand Beverages

Exhibit 23: Comparative valuation: MANB trades at huge discount on EV/ EBIDTA and PEG although it has lower ROE
DR PEPPER
COCA-COLA CO PEPSICO INC MONSTER BEV NATIONAL BEV COTT CORP Manpasand Bev
SNAPPLE
CY18 CY19 CY18 CY19 CY18 CY19 CY18 CY19 CY18 CY19 CY18 CY19 CY18 CY19
Market Cap (Usd bn) 193.6 166.9 28.6 17.14 4.2 2.0 0.7
Sales Growth % -12.0 2.20 1.4 3.7 10.5 11.6 3.8 3.9 13.9 12.3 1.2 0.1 31.9 23.7
PAT Growth % 4.8 8.1 8.0 7.7 14.8 16.4 8.6 8.5 19.9 16.6 19.3 18.2 41.9 32.5
P/E 22.9 21.2 21.1 19.5 29.4 25.3 18.5 17.1 33.0 28.3 32.6 27.5 30.8 23.2
PEG 4.8 2.6 2.6 2.5 2.0 1.5 2.2 2.0 1.7 1.7 1.7 1.5 0.7 0.7
ROE 36.1 36.4 61.5 54.1 28.0 25.3 43.9 46.3 N.A N.A 7.4 N.A 11.2 13.3
EV/ EBIDTA 18.3 17.6 13.6 12.8 18.4 16.4 12.2 11.7 19.9 17.1 8.7 8.5 14.4 11.3

Source: PL Research

ROE has come off from 18% in FY15 to Exhibit 24: Return ratios to pick up from FY18
current levels of ~8%, expected to improve 25.0
ROE ROCE
20.9

once new units start production

18.3

20.0

13.3

12.8
12.8
15.0 11.7

11.2
10.6
(%)

8.6
8.3

7.9
10.0

7.6
5.0

0.0
FY15 FY16 FY17E FY18E FY19E FY20E

Source: Company Data, PL Research

Fixed asset turnover has come off given Exhibit 25: Fixed Assets Turnover to remain low due to fast capacity expansion
~3x increase in capacity over FY16-20 and Fixed Assets Turnover Capacity Utilisation % (LHS)
low utilisation in initial years.
Capacity ( lakh Cases/day) (LHS)
3.7
Capacity utilisation peaks at 55% given 60 4.0
3.2
seasonal nature of business. Success of 50 3.5
2.7 3.0
Fruits UP fruit drink can enable gradual 40 2.5
improvement over the years 1.7
30 2.0
1.0 1.5
20 0.7
0.6 1.0
10 0.5
2.2 2.4 2.7 1.5 1.2 1.2 1.3
0 0.0
FY14 FY15 FY16 FY17E FY18E FY19E FY20E

Source: Company Data, PL Research

June 21, 2017 25

 Manpasand Beverages

Exhibit 26: Working capital to sustain at 30-35 days of sales

MANB has seen sharp improvement in Inventory Days Debtor Days Working Capital
working capital to 30-35 days from 67 days
80
in 2 years
70 67
56
60
50
40 30 33 34 34

30
20
10
75 59 76 44 53 36 52 35 50 35 50 35
0
FY15 FY16 FY17E FY18E FY19E FY20E

Source: Company Data, PL Research

Cash flow from operations will increase to Exhibit 27: MANB will turn FCF positive by FY19 based on current capex estimates
Rs2.5bn by FY19 and Rs3.2bn by FY20,
Cash Flow from Op. FCF
resulting in FCF generation
4,000
3,246
3,000 2,525

2,000 1,585 1,735 1,746

827
1,000 575
324
(89)
0
FY14 FY15 FY16 FY17E FY18E FY19E FY20E
(1,000) (229)
(615)
(1,125)
(2,000) (1,583) (1,393)

Source: Company Data, PL Research

June 21, 2017 26

 Manpasand Beverages

Key risks

Managerial bandwidth to for scaling up sales beyond Rs15bn: MANB is fully

dependent on Mr. Dhirendra Singh who serves as the Chairman and Managing
director and has been the chief strategist of the company. MANB does not have
requisite manpower who have experience in managing large and complex operations
spread across length and breadth of the country.

Seasonality could affect company sales: Fruit drinks are highly seasonal with ~70%
of the annual sales getting booked in Q1 and Q4 (i.e. “Feb to July”) i.e. summer
season. Any adverse change in weather pattern can affect demand and sales.

High dependence on a Single product: While MANB operates in both the Fruit drink
and carbonates segment, however ~75% of sales comes from “Mango Sip” brand i.e.
Mango drink segment.

Failure of new product launches: MANB has launched the “Fruits Up” carbonated
drinks in competition to Coke, Pepsi, Limca, Fanta and Miranda. Slow/Failure of the
“Fruits up” CSD to scale up could pose challenges given significant investments in
capacity creation, distribution and brand building.

Sharp increase in Raw material costs: Sharp increase in the price of raw materials
i.e. Mango Pulp, Fruit pulp, Sugar and packaging material will pose a significant risk
to its sales/profitability as MANB target customers are highly price sensitive.

June 21, 2017 27

 Manpasand Beverages

Annexure
Exhibit 28: Milestone and Important landmarks
Year Event
Incorporation of proprietorship in the name of Manpasand Agro Food
1997
Launched fruit drink brand "SIP"
2005 Manufacturing plant at Vadodara
2007 Set up additional line to produce Tetra-pak fruit drinks
Conversion into a partnership firm under the name " Manpasand Agro Food"
2010
Increased installed capacity at the Manufacturing plant at Vadodara
Conversion from a pvt limited company to a public limited company
Raised Capital from Saif Partners India
2011
Set up a manufacturing plant at Varanasi
Mr. B.M Vyas (ex-MD, GCMMF) inducted on the Board as independent director
2012 Increased installed capacity at Varanasi and Vadodara
Increased installed capacity at Varanasi and Vadodara
2013
Signed Sunny Deol as brand Ambassador for " Mango Sip"
IInd round of fund raising from Saif Partners & Aditya Birla trustees
Launch of " Fruits up", "Manpasand ORS" and " Pure Sip"
2014 Signed Marry Kom as brand ambassador for " Manpasand ORS"
Acquired Manufacturing facitility at Dehradun
Conversion from a private limited company to a public limited company co
2015 IPO of the Company- lIsted on NSE and BSE and raised Rs 4bn
Set up New Manufacturing plant at Ambala
Launched New product 100% Pure Coconut water under new brand "Coco Sip"
2016 Signed Tapsee Pannu as brand ambassador for " Fruits up"
Raised Rs 5bn capital by way of QIP
Acquired land in Sricity, Varanasi & Vadodara for expansion

Source: Company Data, PL Research

Exhibit 29: MANB: Operations and Management team has grown with the company
Name Designation Education/ Area Experience Exp with MANB
Abhishek Singh Whole Time Director B Tech in Food Tech, sales/ operations 7 7
B M Vyas Independent Director Ex MD Amul 41
Dhruv Agarwal Non Ex Director CA , Strategy and IR 16
Vijay Panchal VP/Chief Control Operations 18
Paresh Thakkar CFO/VP Finance B.Com 18 18
Chintan Choksi VP- Sales MBA - Mkt/ Finance 18 18

Source: Company Data, PL Research

June 21, 2017 28

 Manpasand Beverages

Income Statement (Rs m) Balance Sheet Abstract (Rs m)

Y/e March 2016 2017 2018E 2019E Y/e March 2016 2017 2018E 2019E
Net Revenue 5,567 7,572 11,226 14,804 Shareholder's Funds 6,016 11,482 12,365 13,606
Raw Material Expenses 3,255 4,435 6,616 8,709 Total Debt — — — —
Gross Profit 2,312 3,136 4,610 6,095 Other Liabilities (1) (1) (1) (1)
Employee Cost 159 210 314 429 Total Liabilities 6,015 11,481 12,364 13,605
Other Expenses 1,049 1,528 2,168 2,835 Net Fixed Assets 4,023 6,263 7,424 7,925
EBITDA 1,104 1,398 2,128 2,830 Goodwill — — — —
Depr. & Amortization 571 738 1,189 1,449 Investments 891 4,204 3,213 3,745
Net Interest (34) (163) (225) (270) Net Current Assets 1,101 1,014 1,727 1,935
Other Income 91 175 225 270 Cash & Equivalents 44 80 314 146
Profit before Tax 567 824 1,163 1,650 Other Current Assets 1,651 1,834 2,663 3,437
Total Tax 62 101 140 198 Current Liabilities 593 900 1,251 1,647
Profit after Tax 506 724 1,024 1,452 Other Assets — — — —
Ex-Od items / Min. Int. — — — — Total Assets 6,015 11,481 12,364 13,605
Adj. PAT 506 724 1,024 1,452
Avg. Shares O/S (m) 50.1 57.2 57.2 57.2
EPS (Rs.) 10.1 12.6 17.9 25.4

Cash Flow Abstract (Rs m) Quarterly Financials (Rs m)

Y/e March 2016 2017 2018E 2019E Y/e March Q4FY16 Q1FY17 Q3FY17 Q4FY17
C/F from Operations 827 1,585 1,735 2,525 Net Revenue 2,078 2,293 1,025 2,672
C/F from Investing (3,292) (6,292) (1,359) (2,482) EBITDA 428 453 205 518
C/F from Financing 2,473 4,740 (161) (191) % of revenue 20.6 19.7 20.0 19.4
Inc. / Dec. in Cash 8 34 214 (149) Depr. & Amortization 159 149 177 241
Opening Cash 35 44 80 314 Net Interest (18) (16) (58) (84)
Closing Cash 44 80 314 146 Other Income 21 17 60 85
FCFF (1,500) (832) (1,265) 525 Profit before Tax 287 320 86 361
FCFE (2,667) (832) (1,265) 525 Total Tax 31 33 13 48
Profit after Tax 256 286 72 313
Adj. PAT 256 286 72 312
Source: Company Data, PL Research.
Key Financial Metrics
Y/e March 2016 2017 2018E 2019E
Growth
Revenue (%) 54.7 36.0 48.3 31.9
EBITDA (%) 72.2 26.7 52.1 33.0
PAT (%) 68.8 43.1 41.4 41.9
EPS (%) 26.7 25.2 41.5 41.9
Profitability
EBITDA Margin (%) 19.8 18.5 19.0 19.1
PAT Margin (%) 9.1 9.6 9.1 9.8
RoCE (%) 12.0 8.4 8.6 11.2
RoE (%) 12.8 8.3 8.6 11.2
Balance Sheet
Net Debt : Equity — — — —
Net Wrkng Cap. (days) 61 21 38 —
Valuation
PER (x) 79.1 63.2 44.6 31.5
P / B (x) 6.6 4.0 3.7 3.4
EV / EBITDA (x) 36.2 32.6 21.3 16.1
EV / Sales (x) 7.2 6.0 4.0 3.1
Earnings Quality
Eff. Tax Rate 10.9 12.2 12.0 12.0
Other Inc / PBT 16.1 21.3 19.3 16.3
Eff. Depr. Rate (%) 15.3 12.0 13.0 13.0
FCFE / PAT (527.4) (115.0) (123.6) 36.1
Source: Company Data, PL Research.

June 21, 2017 29

 Manpasand Beverages

Notes

June 21, 2017 30

 Manpasand Beverages

Notes

June 21, 2017 31

 Manpasand Beverages

Prabhudas Lilladher Pvt. Ltd.

3rd Floor, Sadhana House, 570, P. B. Marg, Worli, Mumbai-400 018, India
Tel: (91 22) 6632 2222 Fax: (91 22) 6632 2209
Rating Distribution of Research Coverage PL’s Recommendation Nomenclature

50% BUY : Over 15% Outperformance to Sensex over 12-months

44.3%
36.9% Accumulate : Outperformance to Sensex over 12-months
40%
% of Total Coverage

Reduce : Underperformance to Sensex over 12-months

30% Sell : Over 15% underperformance to Sensex over 12-months
18.9%
20% Trading Buy : Over 10% absolute upside in 1-month

10% Trading Sell : Over 10% absolute decline in 1-month

0.0% Not Rated (NR) : No specific call on the stock
0%
BUY Accumulate Reduce Sell Under Review (UR) : Rating likely to change shortly

DISCLAIMER/DISCLOSURES
ANALYST CERTIFICATION
We/I, Mr. Amnish Aggarwal (MBA, CFA), Mr. Gaurav Jogani (MBA, Bcom), Research Analysts, authors and the names subscribed to this report, hereby certify that all of the views expressed in this research report
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Transactions in securities discussed in this research report should be effected through Marco Polo or another U.S. registered broker dealer.

Digitally signed by RADHAKRISHNAN SREESANKAR

June 21, 2017 RADHAKRISHNA DN: c=IN, o=Personal, cn=RADHAKRISHNAN

SREESANKAR,
serialNumber=8859da2df03122989b585ad520865a
32
N SREESANKAR 4f59be69fbc1b7ba2c5315941f987f41de,
postalCode=400104, st=MAHARASHTRA
Date: 2017.06.21 11:15:04 +05'30'