Britannia - 1QFY2013 Result Update - Angel Broking

For 1QFY2013, Britannia Industries (Britannia) posted a moderate top-line growth of 10.8% yoy to Rs.1,222cr (Rs.1,103cr in 1QFY2012). The adjusted profit registered a robust 38.7% yoy growth to Rs.43cr (Rs.31cr in 1QFY2012).

Key highlights for the quarter: Britannia's top-line grew by 10.8% yoy on account of ~4% volume growth and the remaining ~7% growth accounted by price hikes. The company registered a 104bp yoy expansion in its OPM to 5.3% led by a 379bp yoy gross margin expansion to 37.9%, as prices of major raw materials such as wheat and skimmed milk products declined. Consequently, adjusted profit grew by 38.7% yoy to Rs.43cr. However, the company registered a mere 4.1% yoy increase in its reported profit on account of a higher base in 1QFY2012 as it included a profit on sale of property (post-tax) of ~Rs.10cr. During the quarter, Britannia launched Bourbon Capuccino, Pure Magic Praline and a new range of creamy flavors for Treat.

Outlook and valuation: We expect Britannia to post ~17% revenue CAGR over FY2012-14E and model in margin expansion of 85bp, despite sustained higher ad spends due to the benign input cost environment. Further, in terms of earnings, we expect Britannia to post a robust ~27% CAGR. At the current market price, the stock is trading at 18.3x FY2014 EPS; hence, we recommend Buy on the stock with a target price of Rs.584, based on 23x FY2014E EPS.

Source : Equity Bulls

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