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Britannia - Q1 FY22 results first cut - YES Securities

Posted On: 2021-08-02 16:14:14 (Time Zone: UTC)

Strong growth performance on qoq and 2-yr basis; expect the stock to react positively

- Revenue - Declined only 0.5% yoy (expectation of 8% decline) on a strong base of 27% at Rs 34bn indicating a volume decline of only 2% which indicates a strong growth outlook for rest of FY22.

- Gross margins - Gross margins declined 300bps to 38.7% due to a combination of higher palm oil and crude prices and an inferior product mix, which company intends to pass on as the conditions normalize.

- EBITDA margins - In-line with expectation at 16.3%, however down 470bps yoy due to GM decline and sharp 9.2% rise in other expenses.

- PAT - PAT growth of 11.4%/-28.7% YoY/QoQ with PAT coming in at Rs 3.9bn.

- Management commentary - Revenue/PAT grew at 2-yr CAGR of 25%/55% indicating growth resilience and solid execution. Company will continue to mitigate increase in palm oil and crude prices by calibrated price hikes across portfolio. Relaunched Goodday chocochips and launched 50-50 Potazos in North East.

- View - We find the growth trajectory quite encouraging in the current environment albeit margin performance was slightly disappointing given the company's track record of strong overhead controls. Given an improving outlook and currently reasonable valuations at 38x/32x FY23/FY24 earnings, we see good value in the stock and expect a re-rating to begin. We currently have a PT of of Rs 3,809 based on 42x FY23E earnings. We would revisit our estimates post the earnings call scheduled today @ 10.00am; dial in: +9122 6280 1313.

Shares of Britannia Industries Ltd., was last trading in BSE at Rs. 3503.75 as compared to the previous close of Rs. 3420.05. The total number of shares traded during the day was 79203 in over 7668 trades.

The stock hit an intraday high of Rs. 3540 and intraday low of 3432.5. The net turnover during the day was Rs. 277820442.

Source: Equity Bulls

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