Dolat Capital recommended accumulate rating on Britannia Industries with a target price of Rs 3370 in its research report dated February 10, 2019.
Dolat Capital's research report on Britannia Industries
Britannia’s revenue was in line with our estimates, but EBITDA and APAT were a beat. Volume growth was 3% – the third consecutive quarter of low single digit volume growth. Nevertheless, the company was able to report the highest ever EBITDA margin of 16.8% – performance was a positive considering high food inflation during the quarter. Given the current challenging business conditions, the company is focusing more on enhancing distribution reach and improving cost efficiencies. New product launches and innovations continues to remain the company’s focus. We believe its strategy to grow and improve profitability by increasing in-house manufacturing, launching new value-added products, and controlling operational overheads are likely to yield results. We have maintained our FY20E and FY21E EPS estimate of ` 59.1 and `67.6, respectively.
Outlook
We have introduced FY22E EPS estimate at ` 75.2. We value the stock at 50x FY21E EPS, to arrive at a TP of `3,370. Maintain Accumulate.
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