Robust progress momentum continues: Reported income /ebitda/ recurring PAT grew by 24%/39% /85% YoY pushed by robust efficiency of double-digit progress in many of the shopper manufacturers (double-digit progress in 2-year CAGR as properly) aside from Glucon D because the summer season season was delayed. Nutralite (75% is B2B enterprise) additionally continued to witness sequential restoration.
Margins expanded regardless of greater ad-spends pushed by enter value profit and working leverage: Gross margin expanded 70bps to 54.6% pushed by higher product combine and advantages of deflationary milk costs. Nevertheless, reported ebitda margin expanded greater by 260bps to 24% regardless of important step-up in ad-spends (+450bps YoY; +65% YoY) pushed by working leverage — decrease workers value (-300bps) and different bills (-140bps) on account of value saving initiatives. Administration said that they’re on monitor to achieve ebitda margins of 20% by FY22.
Highlights: 1) OCF / FCF grew by 11% / 14% to Rs 2.9billion /Rs 2.7billion, 2) working capital days elevated by 21 days largely on account of greater stock days and decrease creditor days, 3) Direct attain elevated to 0.55mn shops, 4) E-commerce grew ~3x in FY21 (~3.6 of home revenues), 5) Exports enterprise grew by ~2x in FY21 (~3% of general enterprise), and 6) launched 11 new merchandise in FY21 (NPD now contributes ~3.5% of enterprise).
Valuation and dangers: We enhance our earnings estimates by ~3% for FY22-23E. We mannequin income /ebitda / PAT CAGR of 11% / 19% / 36% over FY21-23E – internet revenue more likely to develop forward of income and ebitda pushed by deleveraging of stability sheet. Preserve ‘purchase’ with a DCF-based unchanged goal worth of Rs 2,500. At our goal worth, the inventory will commerce at 35x P/E a number of Mar-23E.
Key draw back dangers are delays or failures in new product improvement or incapacity to increase distribution.