Britannia Industries - Harvesting a 'Golden Triangle' - AXIS CAPITAL

We attended Britannia's Analyst meet, which reinforced our optimistic view on the company. We believe the biscuit king will continue to benefit from (a) Improving pricing power - dramatic shift in consumer preference from plain biscuits to premium biscuits, i.e. cookies and creams, (b) firm rural demand on good monsoon and pre-poll spends, (c) growth in high margin non-biscuit portfolio (i.e. ~23% of revenue), and (d) benign commodity cost environment.

We expect Britannia to post 30% earnings CAGR over FY13-15 led by Management's pursuit of 'Golden triangle' strategy of growing revenue, profits, and market share. High growth visibility, RoE at 52% in FY13 and Net Debt to Equity of 0.3x makes Britannia an ideal candidate for re-rating. Maintain BUY with TP of Rs 900 (23x Sep'15E).

Source : Equity Bulls

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