Britannia Industries Ltd. share price forecast

For Q1FY23, BRIT reported revenue of INR 37,010 Mn, which is a growth of 8.7% YoY and 4.2% QoQ.

Voltas: Voltas' Q1FY23 saw a mixed bag performance. UCP revenue was in line with market share recovery in RAC, while segment margin saw a miss (seen industry-wide). EMPS continued to disappoint, by missing both on revenue and margin. UCP delivered a 125/111% value/volume YoY growth (HSIE 123%), with the three-year CAGR at 8%. Voltas also regained some of its market share, which touched 24% (June exit) vs 19% earlier (March exit), a market share lead of 950bps over the No. 2 player. Voltas is also a leader in the inverter segment (earlier dominated by LG), with the market share at 22%, 300bps higher than LG. Despite increasing competition, we believe Voltas' core strength (after sales service, distribution network, etc.) will continue to support its market share. RAC is Voltas' core business (unlike for other players); we believe an aggressive and proactive approach will continue to bring efficiency and competitiveness in the long run. UCP EBIT margin saw pressure (7.7% vs. HSIE 9%); with commodity softening and easing trade inventory, we expect recovery in EBIT margin. We model 11% EBIT margin for FY24/25. Performance of project business remained weak and we do not expect immediate relief (although we model 6% EBIT margin for FY24/25). We cut our EPS estimates by 17/6/3% (largely to offset weak performance of project business) for FY23/24/25. We value the stock on SoTP (UCP/EMPS/EPS P/E at 43/10/15x and Volt-Beko P/S of 4x) on Jun-24 to derive a TP of INR 1,050. Maintain ADD. Gujarat State Petronet: Our ADD rating on Gujarat State Petronet...

Britannia’s performance, though weaker-than-expected (volume decline of 2% YoY), was still decent (3-year volume CAGR of +6%). Concerns on inflationary raw material further increase (despite some softening recently given BRIT still has room to cover).

We retain our HOLD rating due to the limited upside and value of the company with a revised TP of Rs 3,950 (45x FY24 EPS) vs 3,650 (43x FY24E EPS)

Hero Motocorp: HMC's Q4 earnings were broadly in line with our estimate, at INR6.3bn, as higher-than-expected other income offset the slight miss in EBITDA margin. Management expects the 2W industry to post double-digit growth in FY23 on the back of favourable indicators that include marriage season demand, good festive demand in key regions in April, and positive rural sentiment on the back of healthy crop output. We expect HMC to gradually recover its lost market share in motorcycles over the next 2-3 years, led by: (1) gradual economic recovery driving consumption from the mid-to-low income consumers a key segment for HMC and (2) revival in rural economy. In the premium segment, HMC targets to double its market share to 10% in the coming years, planning at least one launch a year for the next 3-4 years. Even in exports, it seems to have got its act right, having grown by 57% YoY in FY22, albeit on a low base; it targets to ramp up export contribution to 15% of total sales in the next four years. Market share revival in domestic motorcycles and ramp-up in exports are likely to be the key upside triggers for the stock. At 12.4x FY24 PER, the valuation is attractive. We maintain BUY, with a TP of INR2,825/sh. KEC International: KEC reported a muted quarter, with revenue at INR 42.8bn, driven by non-T&D segments. EBITDA margin, at 5.9%, was affected, mainly by rising raw material prices, higher logistic cost, geopolitical situations, supply chain issues and losses in SAE. With the highest...

We tweak our FY22-24E to factor in the impact of RM headinds. Retain HOLD with revised TP of Rs. 3,650 (earlier Rs. 3,700) valuing BRIT at 43x PE its FY24E EPS.

Brand power, increasing demand in urban and rural market with pickup in economic activities and wide distribution network will drive topline growth in future. The company plans price hikes in some products and reduction in grammage in other products to offset input cost inflation. With promising outlook, we upgrade our rating on the...

Retain HOLD with TP of Rs. 3,700 valuing it at 43x PE its FY24E. Key downside risks to our estimates continued surge in RM prices, demand uncertainty due to 3rd COVID wave.

Profit before tax down 17.37% to Rs 507.09 crore. Provision for tax was expense of Rs 136.22 crore, compared to Rs 161.09 crore. Effective tax rate was 26.95% compared to 26.25%. Minority interest increased 35.69% to Rs -2.00 crore. Net profit attributable to owners of the company decreased 18.56% to Rs 371.18 crore. For year-to-date (YTD) results analysis. Net sales (including other operating income) of Britannia Industries has increased 5.80% to Rs 10585.81 crore. Operating profit margin has declined from 20.03% to 15.60%, leading to...

Inflationary pressure on raw materials is expected to weigh on company's near-term performance. Despite price hikes undertaken to combat inflation, we expect margin to remain under pressure in coming quarters. Maintaining a cautious view, we downgrade our rating to HOLD with a revised TP of Rs. 3,950 based on 43x FY23E adj. EPS. Revenue up 6% QoQ, but PAT slips 1.4% Britannia registered revenue growth of 6.0% QoQ to Rs. 3,554cr in Q2FY22, owing to marginal volume and demand improvements during the quarter, especially in the rural...

Consolidated revenue grew 6%YoY (on a base of 12%YoY in 2QFY21) driven by 6%YoY growth in domestic business while revenue from subsidiaries (consolidated less standalone) declined 5%YoY. BRIT has taken c. 4% price hike during the quarter. In international market; Nepal grew in high double digits led by market share gains. Inflationary raw material impacts operating margins Gross margin contracted 502bp to 37.5% driven by material inflation in palm oil (54%YoY), industrial fuel (35% YoY) and packaging material (30%YoY). EBITDA declined 17%YoY to Rs 5.6bn. Decline in Adjusted PAT at 23%YoY is higher due to Rs...

Downgrade the stock to HOLD (BUY earlier) with revised TP of Rs. 3,775 (Rs. 3,890 earlier) valuing it at 43x PE its FY24E. Key downside risks to our estimates continued surge in RM prices, emergence of 3rd COVID wave impacting demand.