We have marginally tweaked our estimates for FY21/22 given the modest growth commentary. Retain BUY with revised TP of Rs. 4,170 (Rs. 4,300 earlier) as we value the stock at 50x its FY22E EPS.

Our view: We believe companies with higher revenue mix from essential commodities and rural will continue to benefit. Ecomm will continue to gain pace as consumers remain wary about venturing into crowded MT stores. Hence, companies with a strong presence and diversified offerings in Ecomm will do well. However, we expect a recovery in categories like Liquor and QSR to continue to be strong, driven by easing of restrictions and strengthening demand for home delivery. While the sector has underperformed Nifty by ~25% in the past six months, we still see limited absolute upsides, given rich valuations and risk-reward remain balanced, keeping us on the sidelines. We see better opportunities in select stocks where business models are strong and valuations have normalised in the last 12-18 months. Aggregate revenue/EBITDA to grow by 4/5%: Our FMCG coverage universe is expected to deliver growth of 4/5% YoY in revenue/ EBITDA (ex-GSK, 1/1%) in 2QFY21 (vs. +6/+6% in 2QFY20 and -14/-13% in 1QFY21). Packaged foods, immunity building healthcare and hygiene segments continue to witness healthy growth while personal care, tobacco, liquor, and OOH categories continue to remain impacted, even as we see QoQ recovery trends. Given pantry loading is over, channel inventory is normalising and unlock across states is continuing, we expect growth divergence to normalise further in 3QFY21 for these categories and return to YoY growth. Personal and Homecare saw strong recovery, led primarily by recovery in the value segment. Recovery across categories has been driven by rural markets, as restrictions continued in varying degrees in most urban...

Strong increase in revenue driven by volume growth In Q1FY21, Britannia achieved one of the strongest growth in topline of 26.4% YoY (of which ~21.5% was attributable to volume growth and ~5% due to favorable mix and pricing) to reach Rs. 3,384cr. Direct reach outlets during the quarter rose to 21.5 lacs (vs. 19.7 lacs in Q4FY20). The company's continued focus on rural sales (~37% of total revenue) led to robust increase in Rural Preferred Dealers (RPDs) to 22k (vs. 19k in Q4FY20). Amongst other channels, Modern trade remained subdued as many stores remained shut down due to COVID-19, alternate channels such as institutional...

Consolidated revenue from operations stood at Rs 3,420.67 crore in Q1 June 2020, rising 27% from Rs 2700 crore in the same period last year. Profit before tax (PBT) jumped 88% year-onyear to Rs 737 crore in Q1 June 2020. Total tax expense surged 36% to Rs 194.37 crore in Q1 June 2020 over Q1 June 2019 and PAT grew by 118% to Rs.543 crore. Profit of the company more than doubled and its margin expanded as the fast-moving consumer goods maker cut...

BRIT's reported a blockbuster performance for Q1FY21 beating our and consensus estimates by a healthy margin on all key metrics. Reported Revenue growth of 26.5% was driven by a strong 21.5% volume growth and 2.5% each price mix and ASP increases) to Rs. 3,385cr (Rs. 3,276cr our estimates).

ICICI Lombard: In FY21E, we expect partial working conditions to result in lower new motor vehicle policy sales and renewals. While motor premiums will be lower, we expect CoRs to improve significantly in FY21E as overall activity levels in the economy will be lower. We expect health premiums to grow with some increase in claims but, over time, we expect higher pricing power in health to protect profitability. Additionally, changing regulations in motor are expected to drive down both claims and tariffs, creating supernormal profitability in the short term. We believe that this period (of supernormal profitability) will be short lived, as we expect IRDAI to restrict third party pricing growth, thereby restraining profitability. We believe the market is not factoring in this risk; accordingly, we rate ICICIGI a SELL with an increased target price of Rs 1,090 (DDM derived Mar-22E P/E of 26.9x and a P/ABV of 5.5x). Britannia: Britannia clocked a robust 26% YoY revenue growth (HSIE 22%) with 22% YoY growth in volume (+4% in 1QFY20 and flat in 4QFY20). Growth in June was 30% YoY, higher than 24% YoY growth in April/May. It was driven by greater traction in packaged food category along with market share gain for Britannia with rising distribution reach. We continue to remain optimistic on the packaged food category in FY21. EBTIDAM expanded sharply by 634bps YoY, led by (1) GM expansion of 124bps YoY, (2) cut down in ASP spend by 200bps YoY and (3) focused cost reduction initiatives. With consumers remaining wary about eating outside, we...

Sharp beat on margins; Near term outlook remains good Britannia Industries' (BRIT) 1QFY21 consolidated revenue (including OOI) grew by 26.7% YoY to Rs34.2bn (vs our est. 22% growth to Rs32.9bn). Standalone revenue (including OOI) grew by 24.8% YoY to Rs32.2bn with volume growth of 21.5% (vs. our est. 20% growth). Consol. EBITDA grew by 81.7% YoY to Rs7.2bn (vs our est. 34.5% growth to Rs5.3bn). Adj. PAT grew by 105.4% to Rs5.4bn (vs our est. 52% growth to Rs4bn). Gross margin was up 120bps YoY (up 200bps QoQ) to 41.7% (vs our est. 41%), led by moderate inflation and better mix from subsidiaries. Inflation in the prices of key raw materials is expected to be stable going forward. EBITDA...

(%) Margins (%) Britannia Industries (BRIT) has been aided by a confluence of positive factors, such as high in-home consumption (biscuits constitute 82% of sales), reduction in ad spend, decline in material cost, and low promotional spend (owing to strong demand). However, this extraordinary earnings growth in FY21 presents a significant hurdle from an FY22/FY23 perspective as none of these factors present a structural positive. Furthermore, material costs could result in high volatility in earnings for BRIT it has one of the lowest gross margins among peers (40% in FY20). While we like the structural story, expensive valuations (47.5x FY22), sustained concerns of elevated group inter-corporate deposits (ICDs) at around INR6b (similar to 4QFY20 when they crossed their own stated threshold of INR5b), and an uncertain earnings outlook beyond FY21 have led us to maintain our rating. Standalone sales grew 24.8% YoY to INR32.3b.

Revenue grew by 26%, highest in the past several quarters. Gross margins improved by 124 bps, while OPM improved by 634 bps. Adjacent product categories such as rusk, bread and cheese clocked...

We are upgrading our FY21/22E EPS estimates by 13.4%/6.8% as BRIT seems confident of sustaining growth momentum on back of improved direct distribution in rural (up 15% in 3 months) and weak states, product innovation/launches (Cream wafers, milkshakes, biscuits, lassi), agility to rebound during Covid and cost efficiency measures. BRIT has proved its resilience during testing times and has emerged stronger than ever recording volume growth of 21.5% and 580bps EBITDA margin expansion led by benign input costs, operating leverage, lower product discounts, efficiency in...

Revenue grew by 26%, highest in the past several quarters. Gross margins improved by 124 bps, while OPM improved by 634 bps. Adjacent product categories such as rusk, bread and cheese clocked...

During FY15-20, Britannia has exhibited remarkable financial performance with Revenue/Net Profit CAGR of 8%/15% respectively. During FY20, the company experienced challenging business environment owing to economic slowdown which was exacerbated by the Covid 19 pandemic. In its Annual Report 2020, Britannia continues to focus on strengthening core brands, launching innovative products,...