Accumulate Britannia Industries; target of Rs 5229: KR Choksey

KR Choksey's research report on Britannia Industries

For Q3FY25, BRITs reported revenue stood at INR 45,926 Mn, up 7.9% YoY (-1.6% QoQ), beat our estimates by 2.1%. Gross margins declined by 515bps YoY (-280bps QoQ) to 38.7%. EBITDA was INR 8,449 Mn, up by 2.9% YoY (+7.9% QoQ), in line with our estimates, due to lower-than-expected employee costs and other expenses. EBITDA margin contracted by 89bps YoY (+161bps) to 18.4%. Adj. PAT was INR 5,817 Mn, up 4.0% YoY (+9.4% QoQ), outperformed our estimate by 3.0%, mainly due to higher-than-expected other income. We lower our estimates for FY26E/FY27E by ~2.0%/2.0% respectively, considering subdued demand, margin pressures from raw material costs, and rising competition. However, Britannia’s market share gains, innovation, cost efficiency, and expansion into new channels support its long-term growth prospects. We expect Revenue/EBITDA/Adj. PAT to grow at CAGR 7.2%/8.2%/9.0%, respectively, over FY26- FY27E.

Outlook

The stock is currently trading at 47.4x/42.7x our EPS estimate for FY26E/ FY27E, respectively. We roll over our valuation to FY27E and assign a P/E multiple of 46.0x, to arrive at a revised target price of INR 5,229 per share (previously: INR 5,601). Consequently, we maintain a “ACCUMULATE” rating on Britannia Industries Ltd.

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