February 27, 2017 / 16:39 IST
Net sales, EBITDA, and adj. PAT grew 16%, 16%, and 8% on a low base (23% decline in net sales in Q4CY15 due to Maggi issue). Gross margin contracted 89 bps YoY to 57.6% on higher input costs but OPM contraction was restricted (down 18 bps YoY to 18.3%) due to lower employee costs (down 24 bps YoY to 12.9%) and other operating expenses (down 12 bps YoY to 27.3%).
Outlook
Maggi was re-launched in Nov’15, but the recovery has been much below expectations. A weak demand environment and recent demonetization did not help. Our EPS for CY17 has declined 22% since Jan’ 16. Maintain SELL with revised TP of Rs 5,300 (35x fwd P/E).
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