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Religare Broking
Britannia Industries (Buy)
CMP: ₹3,207.75
Target: ₹6,519
Britannia Industries continued its strong growth momentum in Q2FY19. Its overall H1FY19 revenue grew by 10.8 per cent y-o-y, driven by healthy volume growth and product mix. During the same period, the company’s EBITDA and PAT margins improved by 113 bps and 60bps, on back of cost saving initiatives and premiumisation of products. Further, we believe Britannia would grow at the same pace in H2FY19.
Valuation: We estimate Britannia’s revenue and PAT to grow by 13.6 per cent and 19 per cent CAGR respectively over FY18-20E, led by healthy outlook of Indian biscuit segment, steady capacity addition, improved product mix, increasing direct distribution reach, continued efforts towards renovating & innovative products and cost saving efforts.
Other key highlights: 1) Inflation of around 4 per cent was witnessed in raw material prices; 2) Price hike would be taken in the coming quarters by around 3.5-4 per cent; 3) Greenfield project in Nepal to get commissioned in Q4FY19; 4) New launches continued in biscuits (Good-day, Tiger and Pure Magic), Dairy (dairy whitener) and Cake segments during the quarter; 5) Management plans to launch more products in H2FY19.
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