Sharekhan's research report on Britannia Industries
Britannia Industries (Britannia) posted yet another quarter of excellent performance with revenue growing by 17%, while gross margin and OPM expanded by 574 bps and 438 bps, y-o-y respectively, to 43.7% and 19.5% (ahead of our as well street expectation of ~16%). Consistent market share gains and distribution expansion will help volume growth to stay ahead of the industry in the biscuit category. The dairy business is likely to touch Rs. 2,000 crore in the next three years. Adjacencies will grow fast and will contribute 35% to revenue in the next five years. Prices of some key inputs such as palm oil have moderated. This along with the benefit from forward contracts in flour and likely correction in wheat prices would help OPM to remain at 17-19% in the coming quarters.
Outlook
Britannia is currently trading at 57x/50x/42x its FY2023E/FY2024E/FY2025E earnings. We maintain our Buy rating on the stock with a revised PT of Rs. 5,285.
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