Multibagger Stock – Britannia Industries


Company Overview:

Britannia Industries established on 1982 having Head Quarters in Kolkata. The Key Persons were Nusli Wadia and Vinta Bali. The Key Products were Bakery products which were Biscuits, Bread, Cakes and Rusk and Dairy Products were Milk, Cheese, and Butter, ghee and Dahi. The company was established in 1892, with an investment of Rs. 295.

Its manufacturing amenities are located in Kolkata, Delhi, Chennai, Mumbai, Uttarakhand, Orissa & Bihar. Devolution of manufacturing facilities is likely to help it in consolidating regional allocation costs and therefore control overall logistics cost.

Company Revenue Background:

The Company reported strong 4th quarter results as lower costs and increased sales of higher-margin products improve its profits. The company’s Net profit increased to Rs.87.8 crs, up 65.55%, as compared to the Net profit of Rs.53.03Crs in the corresponding quarter last fiscal. The Total income grew to Rs.1523.52Crs, up 14.36% YoY as compared to Rs.1332.12 Crores.

Intended for Fourth QFY2013 Britannia Industries posted a 13.5% YoY growth in Net sales to Rs.1486Crs on account of both higher volumes and better realizations. Additional income rise by 106.26 percent y-o-y to Rs.21.10 Crores. Its working profit margin grew quite strongly by 270 basis points to 7.8 percent as against 6.1 percent YoY. Cost of raw material obsessive declined to Rs.648.37Crs in 4th quarter from Rs.655.24 Crores YoY. As well, Britannia recommended a dividend of Rs.8.50 per share for the year ended 31st March 2013.

Britannia Industries is much more than a biscuit company.  From side to side its strong diversification efforts, it has rapidly expanded into other segments such as dairy and confectionery which nowadays contribute 25% to its Sales.

It has amplified its focus on the Health & Nutrition category and is launching products which have noteworthy product differentiators. Nutri choice biscuits, Slimz Milk, Britannia cheese slices with 30% more calcium and Multigrain, multifibre, honey & oats, and wheat breads.

The Company has been victorious in evolving its product portfolio into a more value added product mix. Its civilizing product mix will drive its Revenue and maintain Margin growth in times to come.

Company Valuations:

The Company is trading at attractive valuations of EPS 20.9x FY14E and 24.8x FY15E with the P/E multiple of 32.5 & 27.5 for FY14 & FY15 respectively, offering potential for sizable growth. Britannia Industries is trading at 1.3x its market cap to sales, making it highly undervalued compared to its peers like ITC & Nestle.

The Company product portfolio, higher contribution of value added offerings, coupled with stabilization of softened raw material prices will lead to vigorous earnings. The new products launches will further lower reliance on the biscuits category and assist in volume growth in the business. We Bet to Grab Share near Rs. 660 for Target of Rs 900 in Time Period of 9-12 Months.

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BSE INDIA ID: 500825