Sumit BilgaiyanFounder of Equity99
Britannia Industries remain one of the largest FMCG players with its major presence in biscuits segment. The company has posted consistently better results on QoQ as well as YoY basis.
In Q3FY18 itself, Britannia's net sales grew by 9.4 percent YoY at Rs 25,583 million despite GST owing to cost reduction, reduction in wastages & growth in volume momentum due to revival in consumer sentiments and pick-up in consumer demand.
Great efforts over the past few years has helped Britannia to double its rural sales to Rs 15.56 billion. The company sees huge headroom for growth in rural markets, and expects revenue contribution from rural only to increase to 30-35 percent (from 20 percent now) over coming 2-3 years.
With Britannia’s consistent healthy performance in a difficult operating environment through growing its portfolio with new innovative products in the premium segment, capturing new markets and geography rapidly, expanding distribution channel, focus to increase penetration in rural areas and significant expansion of its own manufacturing will help it to grow more faster in the market.
We recommend a buy with a target price of Rs 6,900 due to improving visibility on both volume recovery and margin growth.
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