Axis Securities
Britannia (Buy)
Target: ₹4,300
CMP: ₹3,805.45
Britannia Industries has reported a blockbuster performance for Q1FY21, beating ours and consensus estimates by a healthy margin on all key metrics.
The strong volume growth was driven by an excellent execution, category tailwinds and portfolio maximisation. Core EBITDA margins of 21.2 per cent, +644 bps y-o-y expansion were at an all-time high despite a rise in Covid-19 led costs, largely driven by GM expansion, A&P rationalisation, sharp focus on cost savings and operational efficiencies.
EBITDA at ₹717 crore was up 82 per cent y-o-y . Strong operating performance and a lower ETR on a y-o-y basis led to a healthy 115 per cent y-o-y growth in PAT at ₹543 crore against ₹249 crore in Q1FY20.
In the near- to medium-term category tailwinds (led by in-home consumption), distribution penetration, share gains in rural areas and benign RM prices are to keep the growth momentum strong.
Retaining ‘Buy’ with a revised target price of ₹4,300 (₹3,877 earlier) at 50x FY22 EPS.