Britannia stock may continue to return well despite expensive valuations: Rahul Shah

In a chat with ET Now, Rahul Shah, BDE, Motilal Oswal Securities, shares his view on Britannia Industries.

ET Now: Do you track Britannia? One is getting a sense that money moving out of Nestle is moving into Britannia Industries. It is a coincidence, but they both represent the similar business. They both compete in the same categories —dairy and bakery.

Rahul Shah: Look at the way Britannia is now is transforming itself into a maker of biscuits — it has prominently beaten up Parle in the market share.

It is time the time when the company should grow big time. The management expects to see around 250 bps margin expansion in the next two years. Considering that, and the way the company has grown in terms of Ebitda levels with around 40 per cent growth over the last two years, we believe that the company should continue to do well. Transforming into an entire food company would obviously augur well for Britannia.

Obviously, the stock is expensive, it is not cheap at current levels. That said, the product mix and the way Britannia has gained the market share make us believe that the stock may continue to perform well from current levels.