Accumulate Britannia, target price Rs 3,920: Angel Broking

Angel Broking has given an accumulate rating to Britannia Industries with a target price of Rs 3,920. The share price moved down by -0.46 per cent from its previous close of Rs 3685.00. The stock’s last traded price is Rs 3668.05.

Britannia Industries’ principal activity is manufacture and sale of biscuits, bread, rusk, cakes and dairy products. It has brands like Tiger, Good-Day, and 50:50 under its fold with an estimated market share of 33 per cent in the Indian biscuits industry. Biscuits contribute more than 80 per cent of the company’s turnover.

Investment Rationale


Britannia has an overall distribution reach of 5.5 million outlets. With consistent focus on distribution expansion, BRIT has narrowed the gap with the No. 1 player. The gap with largest distributed brand is now just 0.8 million outlets.

In Q4FY20, Britannia has outperformed other companies in the FMCG space with year on year growth of 2.5 per cent/20bp/27 per cent in Revenue/EBITDA/PAT respectively.

Going ahead in the near term, the food industry is witnessing a shift from dining out/ street food to home consumption. Britannia being a low price product with trusted brands is well positioned to cater the shift.

Financials

For the quarter ended March 31, 2020, the company reported consolidated sales of Rs 2807.78 crore, down -4.37 per cent from last quarter sales of Rs 2935.98 crore and up 1.58 per cent from last year's same quarter sales of Rs 2764.01 crore. The company reported net profit after tax of Rs 372.24 crore in the latest quarter.

Promoter/FII Holdings

Promoters held 50.63 per cent stake in the company as of March 31, 2020 while FIIs held 14.72 per cent, DIIs 13.37 per cent and public and others 21.28 per cent.