24th July2020

05th October 2019

Sector:FMCG
Sector: Paints
ASIAN PAINTS
BRITANNIA
BSE SENSEX NIFTY CMP: INR 3830 TP: INR 4192.15 HOLD
38973.70 11503.35

Shareholding(%)
Britannia Industries had been a standout players in the FMCG
Promoters 50.61%
space in terms of volume growth and also fastest EBITDA
Public 22.06%
growth. Performance of Britannia has been more than
FII 14.67%
Others 12.66%
promising in Q1-FY21 with 26.4% Y-o-Y increase in Revenue
and 117% increase in PAT. The enablers for such growth can
Price Chart be defined by the following factors. (i) Consistent volume
growth and dominant market share in its key segment-
Biscuits. (ii) Aggressive innovation in scaling up new product
launch and increase in rural distribution channel and (iii) Its
operational efficiency. The above internal factors combined
with the increase in demand in the package food segments
has proven to be favorable for the company. We value
Company Details Britannia based on Relative Valuation and Discounted cash
Market Cap flow Valuation thereby arriving at a target price of Rs
Rs 90.08Cr
('000):
52-week high: Rs 4010 4192.15. Thus, we recommend HOLD rating with a target
52-week low: Rs 2100 price of Rs 4192.15.
NSE volume
8.87 lakh
(6m) :
BSE code: 500825 Key Highlights from Recent Concall
NSE code: BRITANNIA • Company’s revenue grew by 26.5%, operating profit grew by
Free float 91% and PAT grew by 117%
24.07 Cr
(No of Shares):
• Rural Distribution came down from March to April, but by
June the company was back to the level of 22,000 rural
Financials and Valuations(In Crs) distributors.
• The company will reduce its advertising and sales promotions
spending for now until they have enough products to feed
the market fully
• There is a considerable fall in the working capital of the
company due to decrease in inventories and decrease in the
receivables
• The overall inflation was low at about 3%, where flour and
milk had a deflation, sugar experience gentle inflation and
palm oil experienced a steep inflation.
• Company plans to become digitally strong and currently
building new IT system for distribution.
• Company planning to start five new facilities for biscuit
production in Orissa, Bihar, Tamil Nadu, Uttaranchal and
Uttar Pradesh, for which it would be requiring additional
Capex of Rs 700 Cr
 24th July2020
05th October 2019
Sector:FMCG
Sector: Paints
ASIAN PAINTS
BRITANNIA

Key Revenue Drivers

• Increase in Market Demand-Rise in innovation of biscuit product offerings, increasing per

capita household income and increase in consumer spending on food products will lead to
an increase in demand for the biscuit segment. Cookies segment is likely to register fastest
growth due to innovative packaging new flavors, tastes, shapes, new technologies & rising
health consciousness among consumers. With our Indian culture becoming more open
and with government taking several steps to create a congenial workplace, it is expected
that the number of women workers will rise going forward. This will lead to lesser time to
cook at home and families are expected to depend on packaged foods more often in the
coming few years.Hence, with all this and Britannia having good market share in this
segment, we can expect a decent volume growth due to this.
• Increase In Britannia’s Market Share- With company developing 5 new facilities in the
region with lower presence and market shares over the period of next 3 years, mainly in
UP, and with constantly trying to increase its rural distributors it can be safe to assume
that we can expect its market share to rise going forward.
• Widening range, healthier options and expanding mid-income group all will help in driving
growth in this sector

Key Cost Drivers

• Decrease in the cost of goods sold- Company is following a rigorous cost efficiency drive
due to which we expect costs to go down in the future thereby increasing the margins for
the company.
• Employee benefit Expense- With company looking to establish factories into 5 new
locations, we expect employee cost as a percentage of sales to go up in the short run, but
as the sales starts to rise from these factories, it would come down eventually.
• Advertising and Sales- Company has for now planned to keep the cost in this segment low
but moving forward we can expect some rise in this segment because it would try to push
its new salty snacks and dairy products as the company is constantly working to innovate
in this segment.

SUBMITTED BY-

Name- Sahil Batra

College- International Management Institute, New Delhi