Britannia Industries Ltd. share price target

Above expectations: Consolidated net sales, adjusted EBITDA and adjusted PAT grew 7.8% (comparable), 16% and 19% (vs. consensus estimates of 8%, 13% and 10%). Revenue growth was aided by mid-single digit volume growth. Gross margin improved 67 bps YoY but flat QoQ at 37.6% on benign input cost. EBIT

The company's lower dependency on wholesale channel and continued focus on enhancing direct reach has helped it tide over the aftermath. The company has more than doubled its direct reach from 70,000 in FY14 to 1.7mn at the end of H1FY18. Britannia achieved 5.5-6% volume growth through investment in brands and widening its distribution network through focus on direct reach and rural markets in this quarter. Rural market continues to grow in double digits. Market outlook for rural regional markets is looking up post GST implementation....

Maintain BUY with a TP of Rs 5,226 BRITs net revenue in 2QFY18 was up 7.4% at Rs 25.4bn vs. expectation of 10%. EBITDA/APAT up by 11/16%. Domestic business grew by 7%, with ~6% volume growth (in-line). BRITs strong execution has resulted in 8% growth in EBITDA in 1HFY18 vs. Dabur at -4%, Marico at -7% and Emami at -13%. BRIT adapted to GST implementation better than its peers.

Britannia Industries Ltd Q2FY18 results comment Revenue grew by 14.01% to Rs. 2536.53 Cr in Q2FY18 when compared to the previous quarter. Also, it rose by 7.43% when compared with Q2FY17.

BRIT reported 7.4% YoY consolidated sales growth in 2QFY18. Standalone sales too were up by 7.8% YoY. This implies that subsidiary sales grew decently by 1.8% YoY, despite a difficult operating environment in the Middle East. Base business volume growth is expected to be ~5% (press release states mid-singledigit volume growth), as against our estimate of 6% growth. Management...

As per our channel check, ITC's Mom's Magic has gained scale and cornering market share in cookies Britannia's forte. Upping the ante, Britannia is offering 13-26% extra under its cookie brand Good Day, while ITC is offering 21-25% extra under Mom's Magic

Steady Volume Growth in the Face of Challenging Environmentand Gross Margins Diluted by Higher Input Cost: Britannia has delivered a steady overall volume growth of 2.5% in Q1FY18 under the challenging market conditions and destocking due to GST, when compared to 2.0% volume growth in Q4FY17. During the quarter, Britannia has reported Total Revenue from Operations (without including Other Income) at Rs.23398 Mn, posting YoY growth of 6.5% when compared to Rs.21966 Mn in Q1FY17.

Q1FY18 in line: Consolidated net sales, EBITDA and PAT grew 6%, 4% and -1% (vs. consensus estimates of 5%, -1% and 0%). Domestic volume grew 3%, while overall volume grew 2.5%. Gross margin contracted 121 bps YoY but stood flat QoQ at 37.6%.

We value BRIT based on P/E of 38x Jun-19EPS. We maintain BUY rating with a TP of Rs 4,418. BRITs net revenue was up 5.6% to Rs 22.2bn vs. our expectation of 1%. EBITDA and PAT up by 4% and -1%. BRITs revenue grew by healthy ~7%, despite destocking, that impacted revenues by 5%. Volume growth of 3% was better than other consumer companies. Domestic volume was for Dabur -4.4%, Emami -18%, Marico -9%, Colgate -5% and HUL flat. BRITs continued market share gain was heartening, especially in the rural market (double-digit growth).

Britannia Industries has reported a strong set of numbers in 1QFY18 despite adverse impact of trade pipeline correction before GST roll-out (500bps impact). Consolidated net sales grew by 5.6% YoY to Rs22.2bn on the back of 3% YoY volume growth in core business. EBITDA rose by 2.8% YoY to Rs2.9bn, while net profit marginally declined by 1.5% YoY to Rs2.2bn. Volume growth in the context of GST roll-out is an encouraging sign, in our view. We expect the momentum to improve further in coming quarters with the trade up-stocking, good monsoons and other favourable macro factors. Though a short-term hiccup, we believe that the implementation of GST will increase the pace of conversion from unorganised to organised...