Escorts Securities Ltd.

Nov. 01, 2012

BRITANNIA INDUSTRIES LTD Q213 Earnings Estimate

BUY
CMP (INR)

478

Target (INR)

592

Nominal Value (INR)

BSE Sensex

18,562

Market Cap (Crore)

INR 5,737 ($1.08bn)

52 Wk High/Low (Rs.)

599.9 / 380

Avg Daily Vol

76,800

Shareholding Pattern (%)

30-Sep-12

Promoters

50.92

MFs, DIIs, Banks, Insurance

13.95

FIIs & Foreign VC Investors

15.88

Indian Public

17.5

NRIs/OCBs/Corporates/ Others

1.74

Stock Performance
1-mth

3-mths

6-mths

Absolute

0%

3%

-15%

Relative

2%

-5%

-22%

Britannia

Q213 Earning Estimate sales growing, supported with improve margin

Britannia in Q113, has perform well on a standalone basis, with sales growing by 10.7%
and net profit witnessing marginal growth of 3.9% on YoY basis. However, the net
margin was down 23bps on YoY basis, as last year results include INR 10 crore profits
on land sale. During Q113, Britannia launched Bourbon Capuccino, Pure Magic Praline
and a new range of creamy flavors for Treat.
We expect sales to start improving from this quarter, as new capacities start coming and
with input cost stabilizing, the net margin would also improve further. Thus, we expect
sales to grow by 9% on QoQ basis, and on YoY basis, we expect it to grow by 2.89% to
INR 1,339 crore. Net profit is expected to grow by 20% to INR 45 crore on YoY basis,
with margin improving by 47bps. We believe that, company strategy, started in FY12, on
focusing to improve innovation, cost management and revenue generation will start
getting results.
FY12 and FY13E earnings expectations
In FY12, Britannia sales grew by 18.98% to INR 5,485 crore and net profit by 48.8% to
INR 200 crore. On 5 year (FY08-FY12) CAGR basis, revenues grew by 14.49%, while
net profit grew by 2.5%. New capacities is added in its existing manufacturing units,
while 2 green field units come up in Hajipur, Bihar and Khurda, Orissa in FY12. Due to
focus on innovation, the company was able to launch new products versions on its
entire brand, with all round improvement in packaging and products quality also.

150

Sensex

In FY13, we expect Britannia to grow by 10.60% to INR 6,075 crore, and net profit to
grow by 22.2% to INR 245 crore. On 5-year (FY09-FY13E) CAGR basis, we expect
revenues would grow by 12% and net profit by 11.24%. We expect margin to improve by
38bps on account of effective cost cutting measures taken, from new products launches,
and its subsidiaries coming to profit from FY13E.

100

50
Nov-11

Britannia Industries Ltd. (Britannia), started in 1892, is one of the oldest business
house in India, which is into food processing business, marketing its products under its
many famous brands, such as Tigers, Marie Gold, Good Day, 50/50, Nutri Choice, Good
Day, Bourbon, etc. In the food business, Britannia is the leader in bakery segment, and
also has strong presence in diary segment. Britannia has 5 manufacturing plants located
in India, while, to cater its international markets, it has its own manufacturing facilities
base in Dubai and Oman for Middle-East markets, and in North America.

Dec-11

Feb-12

Apr-12

Jun-12

Aug-12

Particulars (INR Crore)

Revenues
QoQ growth
YoY growth
Cost of Sales
Gross profit
Margin
EBITDA
Margin
YoY growth
Net profit
Net Margin
YoY
EPS (INR)
PER (x)

Oct-12

The company is trading at a PER of 23.75x on FY13x earnings. Britannia is a strong

brand in India, support by large manufacturing capacities, along with its own distribution
systems. Britannia is the market leader in bakery segment of food industry and has
extended its products range to diary business and this strategy will work well, as both
product-lines can be supply on the same distribution channel. We believe that, Britannia
with its focus on the packaged and branded food industry would grow continuously, as
only 9% is the penetration level in India, and thus, the level of growth opportunities is
huge. Thus, we recommend BUY on the stock around its CMP of INR 478 level, for a
target price of INR 592. Our target price is on the basis of 29x PER on FY13x earnings.

Q2'13E
1,339
9.00%
2.89%
1,047
292
21.82%
79
5.89%
23.82%
45
3.39%
20.0%
3.80

Q1'13
1,229
-6.72%
10.76%
968
260
21.19%
72
5.88%
139.48%
43
3.54%
3.9%
3.64

Q2'12
1,296
17.33%
-9.33%
1,049
247
19.07%
64
4.91%
-78.65%
38
2.92%
-81.5%
3.17

FY11
4,609

FY12
5,485

FY13E
6,075

21.72%
3,648
961
20.86%
237
5.13%
31.72%
134
2.91%
30.2%
11.24
43.17

18.98%
4,308
1,178
21.47%
311
5.67%
31.35%
200
3.64%
48.8%
16.72
29.01

10.60%
4,709
1,366
22.48%
412
6.79%
32.68%
244
4.02%
22.2%
20.43
23.75

Escorts Securities Ltd.

(COME, GROW WITH US)

Institutional Research

Britannia Industries Ltd.

RK Suranjoy Singh - Manager- Inst. Relationship

suranjoy@escortssecurities.com

(91) 9167391577

Pranav Datar Institutional Sales

(91) 9819054746

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