Britannia Industries - Result Update 1QFY2014 - Angel Broking

For 1QFY2014 Britannia Industries (Britannia) posted a strong 98.8% yoy growth in bottom-line to Rs. 86cr, which is ahead of our estimate. The robust performance on the bottom-line front was led by a 300bp yoy expansion in OPM due to higher gross margin and reduction in other expenses. The company's 1QFY2014 OPM is the highest in the last 15 quarters.

Key highlights for the quarter: For 1QFY2014, Britannia's stand-alone top-line rose by 14.9% yoy to Rs. 1,403cr yoy driven by superior product mix and higher price realizations. Volume growth is expected to be in low to mid single digits. The OPM rose by 299bp on a yoy basis to 8.3% on account of superior mix and better realization. Gross margin rose 234bp yoy aided by softening prices of inputs. However, advertising costs as a percentage of sales rose by 94bp yoy due to increasing competitive pressure. The bottom-line rose by 98.8% yoy to Rs. 86cr.

Outlook and valuation: We expect Britannia to post a revenue and bottom-line CAGR of ~15.1% and 24.4% respectively over FY2013-15. At the current market price, the stock is trading at 25.1x FY2015E EPS; we have a Neutral rating on the stock.

Source : Equity Bulls

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