Britannia Industries Ltd. share price target

Essential nature of products a saviour in near term: Nearly 80% of Britannia's turnover comes from Biscuits which is an essential category and thereby a lower impacted one owing to COVID-19 led nationwide lockdown.

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Recent underperformance and improving margin outlook on easing input prices provide a good entry opportunity, in our view. 9M volume growth is slow, partly due to weight reductions, but sales growth is better with higher price/mix on pricing and cut in promotions. The correction in crude and palm oil prices by ~20% from peak and softening in wheat prices are reducing inflation concerns. In addition, recent price hikes and BRIT's strong...

fine tune its products in new categories like Croissants (national roll out in next 3-4 months), Salty Snacks (national roll out in 6 months) once demand pick up is visible. Wafers is doing well and BIL is already a No....

The food inflation shot up cost of raw materials (mainly dairy up 42% YoY). However, strong cost cutting measures and waste deduction techniques propelled EBITDA margins by 110bps YoY to an all-time...

Britannia delivered a modest quarter with a broadly in-line performance on revenues front with a 2% domestic volume growth on high base and weakness in demand. However, operationally the performance came in ahead of our and consensus estimates aided by acceleration in cost saving program

Britannia Industries Limited is a food company, which is engaged in the manufacture of biscuits, cakes and rusks. The Company operates through the Foods segment, which comprises bakery and dairy products. The Company's product brands under biscuits category include Good Day, Crackers, Nutri Choice, Marie Gold, Tiger, Milk Bikis, Jim Jam- Treat, Bourbon, Little Hearts, Pure Magic and Nice Time. Its products under diary category include Cheese, Fresh Dairy and Accompaniments. Its products under cakes category include Bar...

Despite the continued struggle to grow revenues in FY20, market share gains were unprecedented. It reflects BRIT's strong execution capabilities in the challenging phase. Although new product launches will be slow in the near term, we believe BRIT will bounce back in 2HFY21. BRIT can become a total snacking company as it has all the right ingredients i.e. brand strength, deep distribution, superior management execution and operating scale. Besides, we expect BRIT to continue gaining share in biscuits led by premiumisation and distribution expansion in Hindi belt. BRIT's 3Q performance was soft and revenue grew at slow pace of 4% (11% 3QFY19, 6% 2QFY20) vs. expectation of 7%. Weak rural demand continues to impact BRIT and 9M revenue growth was at 5%. However, market share gains were significant and unprecedented. Considering weak offtake, BRIT is focusing on strengthening the core i.e. (1) Higher focus on distribution reach, (2) Efficient supply chain to improve ROI for trade partners and (3) Targeted product campaigns. Co is consolidating new launches and concentrating efforts on depth of distribution. Steep inflation has been well managed by RM hedges and reduction in wastages. GM was down by mere 44bps. While, cost efficiencies and control on overheads (flat ASP) has improved EBITDA margin by 94bps. EBITDA growth of 11% was healthy. We cut estimates by 3% to factor slower recovery. We value BRIT at 45x P/E on Dec-21E EPS, arriving at a TP of Rs 3,551. Maintain BUY.

Britannia Inds jumps profit meets estimates on lower tax expenses Net sales rose 3.8% to Rs 2935.98 crore in Q3 December 2019 from Rs 2827.40 crore reported in Q3 December 2018. Its earnings before interest, tax, depreciation and amortisation rose 11...