Healthy Volume growth, improved mix to drive margins
HOLD
Britannia Industries Ltd. reported robust topline growth of 21.4% y-o-y to Rs 1106.3 crores on account of volume growth (12-13%) & price growth of (6-8%). EBITDA grew 23.8% y-o-y to Rs 50.6 crores. Despite price hikes, margin expansion was limited at 9 bps y-o-y on account of high raw material prices.
Target Price (Rs): 515 Potential Upside : 8%
Market Data
Sep 08, 2011
Net profit grew by 27.3% y-o-y to Rs 41.8 crores on the back of strong operational performance & higher other income, partially impacted by higher effective tax rate.
Shares outs (Cr)
Strong topline growth driven by volumes & price hikes: Britannia Industries Net sales improved by 21.4% y-o-y to Rs 1106.3 crores on account of healthy mix of volume(12-13%) & price growth(7-8%).Consolidated revenues increased by 21% y-o-y. The non biscuit segment with a size of 900 crores has shown robust growth & has more than doubled in last 5 years. We expect Britannia’s revenue to grow at a healthy CAGR of 17% over FY11-13E on account of double digit volume growth, continuous innovations, increased penetration & judicious price hikes.
52 Wk H/L (Rs)
534/324
Face Value (Rs)
2
Valuations & Views – Britannia industries continues to report healthy topline growth driven by product mix, healthy volumes & judicious price hike. With improvement in product mix(led by innovations & decrease in proportion of Glucose in the overall biscuit segment),stepping up of cost cutting initiatives across the value chain, leveraging the synergies across segments & judicious price hikes we expect margins to improve going forward. We expect Britannia’s Revenue & EPS to grow at healthy CAGR of 17% and 39% respectively over FY11-13E.At CMP of Rs 476, the stock is trading at 26x FY12E EPS of Rs 18.3 & 20.3x FY13E EPS of Rs 23.4.We recommend a HOLD on the stock with a target of Rs 515, based on 22x FY13E EPS of Rs 23.4, giving an upside potential of 8%. Key Financials
5697
Bloomberg Code
SENSEX
17,165
NIFTY
5,135
Price Performance 140 130 120 110 100 90
FY10
FY11
FY12E
FY13E
3403.5
4213.7
4942.7
5740.7
EBITDA
162.3
224.0
315.1
398.4
PAT
116.5
145.3
218.6
279.3
EPS
9.8
12.2
18.3
23.4
OPM
4.8%
5.3%
6.4%
6.9%
NPM
3.4%
3.4%
4.4%
4.9%
PE
47.8
38.3
25.5
19.9
Sales
Britannia
Aug-11
Jun-11
Apr-11
Feb-11
Dec-10
Oct-10
80
Sensex
Share holding Pattern (%) Particulars
Jun-11
Mar-11
%
Promoters
50.96
50.96
0.0
DII
16.59
16.65
-0.06
FIIs
10.62
10.33
0.29
Public
21.83
22.06
-0.23
Total
100
100
Source: BSE
Rs Crore
Particulars (Rs Cr)
BRIT IN
Market Info:
Aug-10
Net Profit improved by 27.3% y-o-y to Rs 41.8 crores on account of strong operational performance & 31% y-o-y increase in other income (includes profit on sale of property).
23.9
Mkt Cap (Rs. Cr)
Jun-10
Margin expansion minimal despite price hikes: Britannia’s EBITDA grew by 23.8% yo-y to Rs 50.6 crores. The company took price hikes of 6-8%; however the significant increase in raw material costs curtailed the gross margin expansion to 11 bps y-o-y. Out of its key raw materials, wheat & Sugar have remained stable in Q1 but SMP, refined palm oil & Cashew have increased significantly by 24%, 35% & 74% respectively.
11.9
Equity Cap (Rs. Cr)
Source: Company Data, KRChoksey Estimates
KRC Research is also available on Bloomberg KRCS, ThomsonReuters, Factset and Capital IQ
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