Britannia Industries Ltd. share price target

Demand in domestic business remained resilient; gained market share Consolidated revenue declined 0.5%YoY (while up 9%QoQ) supported by 0.5%YoY growth in domestic business driven by market share gain. Revenue from subsidiaries (consolidated less standalone) declined 17%YoY (-6% QoQ). Export business got impacted due to container availability issues. In international markets; revenue from Nepal grew +26%YoY driven by market share gain. In Middle East BRIT has revamped distribution by on-boarding a new distribution partner. Inflationary raw material impacts operating margins...

Maintain BUY with unchanged TP of Rs. 3,890 as we roll forward to FY24E. Key downside risks to our estimates continued surge in RM prices, emergence of 3rd COVID wave impacting demand.

BRIT's consolidated sales were flat YoY at INR34b (est. INR31.1b) in 1QFY22. Consolidated EBITDA declined 22.8% YoY to INR5.5b (in-line). Consolidated PBT fell 28% YoY to INR5.3b (in-line). Consolidated adjusted PAT declined 28.7% YoY to INR3.9b (in-line). Growth in the base business volume came in at 1% in 1QFY22 (est. -10%). The consolidated gross margin contracted 300bp YoY to 38.7%. Higher staff costs (+10bp YoY) and other expenses (+160bp YoY) resulted in...

Britannia (BRIT) 4QFY21 result was below our estimates. Standalone revenue grew at 8% driven primarily by volume growth. Shutdown in business operation due to implementation of large scale digital project impacted primary billing for 3 days in Mar'21. However, this is likely to drive cost based efficiencies going forward. Deflationary raw material cost drove margin expansion. Management is aiming to drive aggressive growth of Milk-Bikis biscuits with (i) a new brand positioning of Doodh Roti Ki Shakti (ii) a new brand ambassador; Pankaj Tripathi (iii) first time Hindi labelling on products to win Hindi heartland (Milk Bikis so far has been a regional brand restricted...

The structural story for BRIT remains strong, especially aided by: a) direct reach expansion to ~2.4m outlets (second best after HUVR) and b) further investment in IT infrastructure as highlighted in 4QFY21. The remarkable market share improvement for eight consecutive years will continue as the company widens its moats over peers. Maintain BUY....

We maintain BUY with TP of Rs. 3,890 (earlier Rs. 4,170) as we reduce our multiple to 43x FY23E EPS (earlier 45x).Key downside risks to our estimates easing of lockdown, faster adoption of out-of-home consumption and sudden surge in RMs.

It has reported consolidated revenue growth of 13% for the year to Rs. 12,883 crores. Consolidated Operating Profit increased 39% for the year to Rs. 2,311 crores. Consolidated Operating Profit % recorded an increase of 340 bps during the year and return on capital employed stood at 40% for the year. The Operating profit of the Company has been steadily growing & has increased from 4% in 2009-10 to 18% in the current year making it amongst the most profitable food companies in the World. In addition, the Company has been consistently...

We recommend BUY with Target Price of Rs. 4,170/-.

Strong structural opportunity: BRIT's opportunity for growth is significant, with the overall Biscuits category estimated to grow in the mid-single digits. Furthermore, the opportunity in terms of market share gains is even greater BRIT's market share is only in the mid-30s despite the company being the largest player in the Biscuits space. The broad Packaged Foods market (estimated at USD4050b) presents the strongest structural opportunity in India's consumption space. BRIT's FY21E revenue of ~USD1.8b is a fraction of this addressable market....

Strong structural opportunity: BRIT's opportunity for growth is significant, with the overall Biscuits category estimated to grow in the mid-single digits. Furthermore, the opportunity in terms of market share gains is even greater BRIT's market share is only in the mid-30s despite the company being the largest player in the Biscuits space. The broad Packaged Foods market (estimated at USD4050b) presents the strongest structural opportunity in India's consumption space. BRIT's FY21E revenue of ~USD1.8b is a fraction of this addressable market....