Britannia Industries – A Premiumization Play in Foods

  • 23rd April 2015
  • CMP: Rs 2151
  • Large Cap – Mkt Cap 26,000 crores
  • Advice: BUY, with a target of Rs 3168, a 47.3% appreciation by Mar’17.

Summary

Britannia rides not just the consumption theme, but within that the large food segment and also commands a premium image. Britannia is a powerful brand in this space. As an organization, BIL has recovered completely from the poor performance in 2010. Under a new leadership it is reinventing itself across marketing as well as operations. After many good initiatives in biscuits, the focus is on the high potential dairy products. The market conditions have been challenging in 2014-15, but even so, BIL has performed excellently so far. We expect the demand to look up in the next few years, and BIL to be a multi-year outperformer for investors. Investors may buy the stock for a Mar’17 target of Rs 3168, a 47.3% appreciation.

This is an update of our Feb 2014 report on Britannia Industries – A Ready to Eat Investment. The share has appreciated 144% in the 14 months since this BUY recommendation. 

Britannia Industries – Description and Profile

  • Britannia Ind. (BIL) is a Bangalore based, bakery and dairy products firm, started in 1892.
  • Revenue in FY14 was Rs 6,912 crores and PAT 396 cr, a growth of 52.3% from FY13.
  • Revenues have grown 17% (CAGR) over the last 6 years. Market Cap is 25,300 cr., ranked 2nd in India in the food processing industry by market cap. It has about 2340 employees.
  • BIL operates in foods segments of (i) Bakery – biscuit, bread, cake & rusk and (ii) Dairy – milk, butter, cheese, ghee, dahi, milk-based ready to drink beverages & dairy whitener.
  • The biscuit market is worth 24,000 cr. and BIL has 27-30% market share in India. The dairy segment is much larger at 75,000 cr. but BIL has a very small share here.
  • The shareholding % is: Promoter 50.8, FII 19.5, Retail/HNI 17.2, DI-5.2, MFs 4 and Corporates 3.3%.
  • Key executives are: Chairman Nusli Wadia, Director Ness Wadia and MD Varun Berry.

The report can be downloaded – JainMatrix Investments_Britannia_Apr 2015.

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Disclosures and Disclaimer

This document has been prepared by JainMatrix Investments Bangalore (JM), and is meant for use by the recipient only as information and is not for circulation. This document is not to be reported or copied or made available to others without prior permission of JM. It should not be considered or taken as an offer to sell or a solicitation to buy or sell any security. The information contained in this report has been obtained from sources that are considered to be reliable. However, JM has not independently verified the accuracy or completeness of the same. Neither JM nor any of its affiliates, its directors or its employees accepts any responsibility of whatsoever nature for the information, statements and opinion given, made available or expressed herein or for any omission therein. Recipients of this report should be aware that past performance is not necessarily a guide to future performance and value of investments can go down as well. The suitability or otherwise of any investments will depend upon the recipient’s particular circumstances and, in case of doubt, advice should be sought from an independent expert/advisor. JM has been publishing equity research reports since Nov 2012. Punit Jain has been a long term investor in BIL since March 2014. Other than this JM and its promoters/ employees have no financial interest in BIL or their group companies, and no known material conflict of interest as on date of publication of this report. JM is voluntarily compliant with SEBI (Research Analysts) Regulations, 2014. Any questions should be directed to the director of JainMatrix Investments at punit.jain@jainmatrix.com

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