GSK Consumer reported healthy numbers with strong bottom-line growth, ahead of consensus estimates. Revenue for the quarter (net of excise duty in base quarter) grew by 7% yoy to Rs1,179.6cr, in-line with the estimates. On account of low input costs, the gross margin of the company expanded by 245bps yoy. EBITDA for the company grew by 14.7% yoy to Rs250.0cr and EBITDA margin expanded by 143bps yoy to 21.2%. Aided by EBITDA margin expansion, lower depreciation cost and higher other income, PAT grew by 20.4% yoy to Rs211.8cr, ~8% higher than the estimates.
Volume growth for the quarter was ~8% yoy in both Horlicks and Boost portfolio. This growth is driven by rural improvement, company’s aggressive promotional/campaigning strategies towards brand building initiatives.
Post GST, as the rate was revised lower for the company’s portfolios (from 28% to 18%), company has taken price reduction in November 2018. However, the competition has not undertaken any price cut.
The newly launched protein products are doing well for the company has already gained 0.4% market share in two months.
Sachets volume for the company continued to grow in high double digit, led by visible distribution & strong on-air support.
Company benefitted from lower input cost and hence, gross margin expanded by 245bps.
Advertisement expense as percent of net sales declined by 139bps yoy to 14.3%. However, employee expense as percent of net sales was up by 239bps yoy to 11.7%.
Depreciation for the quarter was down by 17.9% yoy.
Other income was up by 20.2% to Rs84.2cr.
Market share for Horlicks (including extensions) stood at 55.9% and for Boost stood at 11.2%.
No clarity on the strategic review by the parent for the sale of Horlicks globally. Management indicated that the clarity would come only at the end of the year.
Company has recommended a dividend of Rs75 per equity share of Rs10 each.
GlaxoSmithkline Consumer Healthcare Ltd is currently trading at Rs. 5,932, up by 58.9 points or 1% from its previous closing of Rs. 5,873.10 on the BSE.
The scrip opened at Rs. 5,878 and has touched a high and low of Rs. 5,962 and Rs. 5,855 respectively. So far 33,129 (NSE+BSE) shares were traded on the counter. The stock is currently trading above its 100 DMA.
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