Angel Broking is bullish on Britannia Industries and has recommended buy rating on the stock with a target of Rs 564 in its February 15, 2013 research report.
“For 3QFY2013 Britannia Industries (Britannia) posted a 5.3 percent yoy growth in bottom-line to Rs57cr, which is in-line with our estimate. The modest performance on the bottom-line front was on account of a steep increase in prices of raw materials, hike in freight charges and higher advertisement and promotion (A&P) expenses.”
“Britannia posted a 16.5 percent yoy growth in the standalone top-line to Rs1,453cr, which is in-line with our estimate. The top-line growth was due to a combination of higher volumes (up 5-5.5 percent yoy), higher pricing (5 percent yoy) and superior product-mix (5 percent yoy). The company’s strategy of extending its brands in premium categories and continuous focus on increasing value-added products in its overall sales mix resulted in better product mix and realization. OPM fell by 116bp yoy to 5.4 percent due to a steep increase in the prices of raw materials (such as wheat and sugar), higher freight charges (due to increase in diesel costs) and also increase in A&P/ sales ratio (up by 143bp yoy).”
“We expect Britannia to post a revenue and bottom-line CAGR of ~13.9 percent and 17.8 percent respectively over FY2012-14. At the current market price, the stock is trading at 22.6x FY2014 EPS; we recommend Buy on the stock with a target price of Rs564,” says Angel Broking research report.
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