Britannia Industries Ltd. share price target

BRIT has driven profitable growth in the last few years. However, weak macros and consumer sentiment pose challenges. Also, ICD exposures raise corporate governance concerns, even as they have declined in a quarter by ~30% to ~Rs 5bn (management guided for a capping at current levels). The stock has corrected ~20% since our downgrade (Jul-18). We are admirers of the brand equity, strategy and management execution and like its focus on expanding the addressable market (total snacks co.), but await concrete evidence for an upgrade. BRIT reported a dull show, mostly owing to weak macros. Modest volume growth and a sharp rise in costs led to negative oplev. EBITDA stagnated. BRITs plan to accelerate growth via new launches (~4% of rev.) has hit a speed bump. While management may keep a tight lid on costs hereon, 1HFY20 performance will be weak. 2H holds some hope. Our estimates fall ~5%; we have cut target P/E to 40x (vs 45x) on account of BRITs moderating trajectory. Our TP is Rs 2,674. Maintain NEUTRAL.

Britannia delivered modest growth in a challenging quarter which was broadly in-line with our expectations. However, a 7% volume growth in the context of a slowdown in consumer demand was healthy. Margins on a YoY basis remained flat dragged by new business scale up expenses and higher brand investm

For the quarter ended Mar 19, consolidated net sales grew by 10% to Rs 2789.96 crore and volume growth stood at 7%. OPM was flat at 15.7% resulting in OP growth of 10% to Rs 436.58 crore. Other income however was up by 39% to Rs 61.79 crore due to higher treasury and forex income in Mar 19 quarter. Interest cost was down by 47% to Rs 1.25 crore and depreciation was up by 11% to Rs 46.90 crore leading to a PBT of Rs 450.22 crore up by 13% YoY. After providing total tax of Rs 155.65 crore, PAT for the Mar 19 quarter stood at Rs 294.57 crore up by 12% YoY. After providing for share of profit of associates for Rs 2.66 crore for Mar 19 quarter as...

BRIT has consistently reported industry leading volume growth and margin expansion. The co. has made some inroads in the Hindi belt (growing 1.5x vs. BRIT) and rural market which has resulted in market share gains. At the same time, BRIT has focused on its cost savings program (4.5x in FY19 vs. FY14) which has further supported in re-investing in its brands. In the last 12 months, the co. has demonstrated its hunger for growth via new launches despite a challenging environment. We continue to like BRIT but rich valuations keep us at bay, as everything needs to go right for the co. Key risk on BRIT remains the return of food inflation. BRIT reported a modest performance (in-line) led by a momentary softness in the sector. Although the stock is down 12% since our downgrade (Jul-18), we dont see any immediate trigger to upgrade the stock. We remain constructive on BRITs transformation to a total foods company and see it as a multi-year growth story. We believe the success rate of BRITs new launches will be the key catalyst for the stock. Our TP at Rs 3,101 is based on 45x FY21E EPS. Maintain NEUTRAL.

flat; PAT grew by 13%: For Q4FY2019, Britannia reported revenue growth of 10.3% y-o-y to Rs. 2,799 crore, slightly better than our expectation of Rs. 2,756.3 crore. Revenue of the India business (standalone) grew by 11.7% in Q4FY2019. Volume growth stood at 7% and improvement in revenue mix/price hike led to 4.6% realisation growth, resulting in overall...

2 May 2019 Standalone sales grew 11.7% YoY to INR26.7b with 7% volume growth in the base business (v/s our est. EBITDA grew 9.9% YoY to INR4.4b (v/s our est. PAT grew 11.7% YoY to INR2.9b (v/s our est. % of sales (up 320bp YoY to 21.

Britannia delivered a healthy quarter despite weaker than expected volume growth of 8% and higher SG&A; expenses (capacity/portfolio ramp-up led expenses).

Britannia Industries Ltd. reported Q3FY19 results with net revenue of `2827crs with growth of 10.5%. EBITDA expanded by 40 bps Y-O-Y to 15.9% in Q3FY19. Volumes grew by 7% while price and product mix contributed 2% each to the growth. The company continued to focus on...

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.