Britannia Industries - March 2013 Results Preview - Motilal Oswal

- We estimate Britannia to post sales of INR14.6b, a growth of ~12% YoY. Volume growth is likely to remain in mid single digits as the discretionary processed foods category is facing moderation.

- We estimate flat EBITDA margin due to higher conversion costs and ad-spends.

- Among input costs, wheat prices are up ~26% YoY and sugar prices are higher by 12% YoY. Palm oil correction should provide a cushion to margins.

- We note that Parle has turned aggressive in the premium categories and has hired the celebrity Amitabh Bachchan as brand ambassador for its premium product Goldstar cookies.

- The stock trades at 25.4x FY14E EPS and 21.4x FY15E EPS. Sell.

Source : Equity Bulls

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