Britannia Industries Ltd. share price target

Our TP is at Rs 3,115, we maintain NEUTRAL. BRIT reported a modest quarter (no fireworks) with miss on volume growth despite strong new product pipeline. Net revenues grew by 11% (12.5% in 3QFY18) vs. exp. of 12%. Volumes grew by 7% (exp. of 10.5%) with 2% pricing and 2% mix benefit. Co. achieved a 15 quarter high gross margin led by premiumisation and change in business model of bread. EBITDA/APAT grew by 13/14% (vs. exp of 15/16%).

RM inflation was at 4%, with inflation in flour (9%) and refined palm oil (RPO; 10%) marginally offset by deflation in sugar and milk. EBITDA margin expansion was restricted to 40bp to 21.3%) and staff costs (+50bp YoY to 4.1%). PAT grew 11.9%, 17.3% and 16.4% YoY, respectively. EBITDA margin expanded 70bp YoY to 15.7%. (1) RM inflation was at 4% in 3QFY19; expecting 4-5% inflation for FY20 as well. (2) Expected to take 3-4% price hike.

Britannia is entering a new phase of growth powered by innovations and Change in Estimates | Target | Reco renovations like 1) Whole Wheat Vita Marie Gold, Goodday Cashew Almond, re-launches in 50-50 & Tiger Creams 2) significant revamp of cakes portfolio...

Britannia delivered a healthy quarter aided by fourth consecutive quarter of double-digit volume growth; operational performance was robust despite sharp surge in A&SP; led by robust GM expansion (aided by better mix and covers in key commodities)

Revenue from Operations grew by 12.5% Y-O-Y to `2855crs in Q2FY19. This was on the back of double-digit volume growth primarily due to investment in brands and widening distribution network and northern states. International business grew at healthy rate...

Britannia Industries Ltd (BRIT) reported in-line numbers for Q2FY19. Its revenue grew by 12.7% yoy driven by double digit volume growth. The company's EBITDA margins improved by 100bps on back of premiumization and cost cutting initiatives. However, its PAT margin improvement was restricted to 30 bps yoy due to increase in depreciation, interest, tax expense and decrease in other income.

Base business volume growth was around 11% (press release states double-digit volume growth) (est. Consolidated EBITDA grew 20.3% YoY to INR4.5b (our est. INR4.6b), while consolidated PAT increased 16.2% YoY to INR3b (our est. Consolidated EBITDA margin expanded by 100bp YoY to 15.8%.

Our TP is at Rs 6,087, with limited upside we maintain our rating of NEUTRAL. BRIT reported another strong quarter, with consistent double digit volume growth (4th consecutive). Net revenues grew by 12.5% (vs. est. 13.5%), largely driven by ~12% volume growth (vs. est. 11%). Benign food inflation coupled with a richer product mix, led to margin expansion. EBITDA/APAT grew by 20/16% (vs. est. 15/13%).

Britannia Industries Ltd Q2FY19 results Comment Revenue grew by 12.96% to Rs. 2854.81 Cr in Q2FY19 when compared to the previous quarter. Also, it grew by 12.55% when compared with Q2FY18. The Sales had been increasing from Q1FY19 to Q2FY19.

Q2FY19 results came marginally ahead of our estimate. The company posted 12% volume growth in the base biscuit business double digit volume growth in the fourth consecutive quarter. 230/100bps expansion in GM/EBITDA margin was driven by deflation in key commodity prices. In addition, strong double digit growth in the IB was encouraging. We believe that the company is on the right track to grow the business and improve profitability with expanding distribution reach, increasing in-house manufacturing and controlling operational overheads. Furthermore, better...