Britannia Industries Ltd. share price target

Our TP is at Rs 6,020 and we maintain BUY. BRIT reported a solid quarter with revenue growth of 13% (volume-led) to Rs 25.1bn (exp. 12%). Brand investments and widening distribution is driving growth. International biz recovered with double digit growth. EBITDA/PAT was up 29/25% (exp. 20/17%).

Q4FY18 results came in line with our estimate. The company posted double digit volume growth in the base biscuit business double digit volume growth in the second consecutive quarter. 50/190bps expansion in GM/EBITDA margin was driven by deflation in key commodity prices. In addition, 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 monsoon this season and changing macros should help....

market and in its overall direct reach. Britannia's total distribution reach currently stands at ~4.8 million outlets from 3.6mn outlets Avg. daily volume (1yr. on NSE) 3 years ago. The growth in the Hindi belt (Rajasthan, MP, UP and...

Britannia will launch 50 products by FY19 and step up intensity in adjacent categories to become a total food company. We continue to like the snacking space given its higher growth, but more importantly we are comfortable with the way the management is steering Britannia.

Britannia Industries Ltd Q3FY18 results comment Revenue grew by 0.86% to Rs. 2558.3 Cr in Q3FY18 when compared to the previous quarter. Also, it grew by 12.96% when compared with Q3FY17.

Marginally ahead of our estimates, Britannia Industries has delivered an impressive set of numbers for 3QFY18. While net sales grew by 13% YoY to Rs25.6bn (vs. our estimate of Rs25.1bn), net profit increased by 19.6% YoY to Rs2.63bn (vs. our estimate of Rs2.6bn). Volume growth in the core business came in at an impressive 11% YoY. EBITDA grew by 31% YoY to Rs3.9bn, 14% higher than our estimate of Rs3.4bn, mainly on the back of lower input cost. Other income declined by 17% YoY to Rs451mn due to lower yields on investments. We continue to be optimistic on Britannia's growth trajectory in coming years on the back of strong management bandwidth, increased distribution reach, superior product-mix, higher...

EBIDTA grew by 26.8% Y-O-Y to `398cr sin Q3. Margins expanded marginally by ~170bps to 15.5%. Its accelerated cost efficiency programme and endeavour to leverage fixed costs have helped the company to improve its margins....

We value BRIT based on P/E of 42x Dec-19EPS. Maintain BUY with a TP of Rs 5,332. BRIT reported a solid quarter with net revenues growing by 12.5% to Rs 25.7bn in-line with our expectations. EBITDA/PAT were up by 27/ 20% vs. expectation of 26/23%. Domestic business grew by 15% with ~12% volume growth (9% expectation). BRIT has been one of the stand-out players in the FMCG mid-cap space during the last 12 months in terms of volume growth (growth reported in every quarter) and fastest EBITDA growth (14% growth in 9MFY18 vs. Daburs 4%, Maricos -2% and Emamis -6%).

Distribution expansion for BRIT has been massive, with its direct reach doubling over the past three years to 1.56m (overall reach of 4.7m outlets at end-FY17, including 0.7m outlets added over the past year). Its direct reach as of 2QFY18 stands at 1.8m outlets (second highest after HUL), implying addition of 0.24m outlets in 1HFY18. BRIT has also set up 13,000 distribution points across rural areas to cater to this market in a better way. We believe that the company should not be benchmarked against Parle's reach of 5.8m outlets (BRIT is narrowing the gap year after year on total reach; in terms of direct reach, BRIT already is twice as large as Parle), given that biscuits is a low-cost/high-velocity consumption product and that there is potential to boost the reach to 9m outlets.

Comparable consolidated revenue posted a growth of 7.4% YoY in Q2FY18. Domestic business also grew by a decent 7.3% YoY despite GST led disruption in July driven largely by volume growth. Although international business witnessed positive growth in Q2, it...