February 09, 2017 / 11:55 IST
Q3FY17 net sales (net of excise) at Rs 1.03 bn were flat YoY – in line with our estimate and once again range-bound in quarterly run-rate of Rs 950-1,100 mn. Despite meaningful investments for category adoption (20% of sales on advertising/distribution over past 10 quarters), the wellness market has not taken off yet in India though we continue to believe that the opportunity size is immense.
OutlookThe management attributed subdued sales in Q3 to demonetization, felt more severely in the wholesale channel. Gross margin declined 300 bps YoY on higher raw material prices (palm oil). EBITDA margin declined by 150 bps YoY at the cost of lower ad spend (-350 bps). Reported PAT at Rs 251 mn, lower 8% YoY. Our estimates remain unchanged. Maintain HOLD and TP at Rs 840 (25x FY18 EPS).
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