GSK Consumer reported healthy set of numbers for the quarter; revenue and EBITDA were broadly in-line with estimates, however, PAT was a above estimate led by higher other income. Revenue for the quarter grew by 7.5% yoy to Rs1,116.8cr, broadly in-line with the estimates. Gross margin of the company expanded by 172bps yoy to 70.7%. EBITDA for the company grew by 14.9% yoy to Rs238.5cr. Improvement in gross margin and lower other expenses (as percent of sales) led to EBITDA margin expansion of 139bps yoy to 21.4%. Aided by significant increase in other income (up 104.8% yoy), PAT reported strong growth of 35.1% yoy to Rs221.1cr, ~8% higher than the estimates.
Company reported volume growth of 8.7% yoy (9.6% yoy volume growth in HFD category). This growth is broad based and across channels; Horlicks grew in double digits.
Company indicated that the rural segment continues to grow at a faster rate than the urban segment.
Sachets witnessed double digit volume growth during the quarter, contributing 10% to the sales (8% in Q3FY18). This was led by distribution and strong on-air support.
Region-wise sales breakup – North 7%, South 41%, East 40%, West 4% and exports 9%.
Benefitting from lower input costs (especially milk), gross margin for the quarter expanded by 172bps yoy.
Advertisement cost was up 114bps yoy to 12.1%; company continued investment behind brands. Company expects 13% of sales to fund innovation & drive Horlicks campaign.
Other expenses were down 217bps yoy. However, the savings in raw material costs and overheads were partially offset by higher employee and advertisement costs.
Other income was up by 104.8% to Rs124.3cr. This was aided by ~19% yoy increase in auxillary income (led by OTC products & strong oral care portfolio performance), higher interest income of Rs20cr and tax credit of Rs40cr (one-off item).
Volume market share for Horlicks (including extensions) stood at 49.5% (43% in value terms; down 30bps qoq) and for Boost stood at 13.9% (value share of 10.8%; down 10bps qoq).
Horlicks Protein+ market share increased to 5%; product available in 85,000 outlets.
The company has taken price hike of 2.5-3% in product portfolio in January, 2019.
GlaxoSmithkline Consumer Healthcare Ltd is currently trading at Rs. 7,281.60, down by 146.55 points or 1.97% from its previous closing of Rs. 7,428.15 on the BSE.
The scrip opened at Rs. 7,320 and has touched a high and low of Rs. 7,320 and Rs. 7,276.80 respectively. So far 3,361 (NSE+BSE) shares were traded on the counter. The stock is currently trading above its 50 DMA.
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