Accumulate Britannia Industries; target of Rs 3812: Dolat Capital Market

Dolat Capital Market's research report on Britannia Industries

Britannia's revenue and EBITDA were in line with our estimate. Domestic volume growth stood at 9%, was in line. The company benefited from consumer up-stocking during the quarter. We believe that the demand would normalize, going ahead. EBITDA margin improved to 19.8% - highest Q2 margin - was driven by cost control measures and comparatively lower A&P spends. Going ahead, we believe that normalization of demand coupled with increase in promotional expenses and fixed costs are likely to pressurize EBITDA margins hereon. New product launches and innovations continue 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.

Outlook

Maintained our FY21E and FY22E EPS estimate at Rs 81.2 and Rs 82.6 respectively and introduced FY23E at Rs 91.1. We value the stock at 42x FY22E EPS, to arrive at a TP of Rs 3,812. Downgrade to Accumulate.

For all recommendations report, click here

Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

Read More