‘Buy’ Britannia Industries stock, check target price; brokerages upbeat on brand strength, growth outlook

On the back of Britannia’s strong outperformance, research and brokerage firms are upbeat on the stock

Britannia Industries share price fell 2.5 per cent to Rs 3,883.05 apiece, after hitting a fresh 52-week high of Rs 4,015 in early morning deals today. Britannia Industries stock price has nearly doubled, rising 91 per cent from March lows of Rs 2,100.55 apiece. Company’s MD Varun Berry on Monday said that Britannia Industries will invest over Rs 700 crore to open five new manufacturing units in the next two-and-a-half years to meet the growing demand in different parts of India. Biscuit and bread maker, last week, recorded an over two-fold increase in consolidated profit at Rs 542.68 crore in the April-June quarter of the current fiscal despite coronavirus headwinds. The company had reported a profit of Rs 248.64 crore in the corresponding quarter of the previous financial year. On the back of Britannia Industries’ strong outperformance, research and brokerage firms are upbeat on the stock. They have revised their target prices with an upside of up to 16 per cent from today’s low.

Britannia Industries will add new units to its existing factories in Orissa and in Maharashtra to enhance the production capacity. The company is also planning to expand its dairy business, as currently, its presence in the dairy segment is very limited.”The recent rally in the share price is also largely in part a catch-up rally (2-year stock CAGR is just 8%, as volume growth suffered last year due to rural slowdown), hence momentum is likely to sustain if the growth remains stronger beyond Q1,” HSBC said in its report. It will take Britannia industries to jump 16 per cent to hit the target price of Rs 4,500 pegged by the brokerage firm. It has revised its rating to buy from hold.

Britannia Industries had put up a factory in Nepal and is now looking at neighbouring market Bangladesh, according to a PTI report. Britannia is a high conviction buy pick of Emkay Global Financial Services. The brokerage firm has revised target price to Rs 4,500 from Rs 3,960 earlier. “Britannia remains the biggest beneficiary of increased in-home consumption and offers the strongest growth outlook,” it said in a report. “Continuing growth momentum in the core portfolio is positive and we believe that the strong opportunity to scale up adjacencies can further improve growth outlook,” it further added.

The FMCG major in a concall said that the bread and rusk sales grew faster than the company average on higher in-home consumption. It’s focus on producing Goodday, Digestive, Milk Bikis, Cream biscuits resulted in high throughput and a 2.5 per cent increase in sales realization. “On the back of improved direct distribution in rural (up 15% in 3 months) and weak states, product innovation/launches (Cream wafers, milkshakes, biscuits, lassi), agility to rebound during COVID and cost efficiency measures, Britannia has proved its resilience during testing times and has emerged stronger than ever,” Prabhudas Lilladher said in a report. With a ‘buy’ rating to the stock, the brokerage firm has given a price target of Rs 4,316, an upside of over 11 per cent from today’s low.

Britannia Industries’ management expects healthy double-digit category growth to sustain in the near-term given COVID uncertainty and rising cases/localized lockdowns. “Brand stickiness is expected to continue even post COVID-19 normalization given consumers’ loyalty. Distribution expansion especially in the Hindi heartland to further drive volumes in the medium term,” Senior Research Analyst Suvarna Joshi and Research Associate Tanvi Shetty at Axis Securities said. the brokerage firm has predicted a target of Rs 4,300, an upside of nearly 11 per cent.

(The stock recommendation in this story is by respective research and brokerage firms. Financial Express Online does not bear any responsibility for their investment advice. Please consult your investment advisor before investing.)