Accumulate Britannia Industries; target of Rs 5367: KR Choksey

KR Choksey recommended accumulate rating on Britannia Industries with a target price of Rs 5367 in its research report dated February 20, 2024.

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February 21, 2024 / 12:06 IST

Accumulate

26 Aug, 2025 12:21

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KR Choksey's research report on Britannia Industries

For Q3FY24, BRIT’s revenue was INR 42,563 Mn, a muted growth of 1.4% YoY (-4.0% QoQ) and in line with our estimate. Volume growth was healthy at 5.5% YoY, supported by grammage additions even as the no. of packets sold grew by ~3.0% - 3.5% YoY. Price cuts were to the tune of 4.0% YoY/ ~2.0% QoQ. Revenue for 9MFY24 was INR 1,26,999 Mn, a growth of 3.4% YoY. EBITDA for Q3FY24 was flat on a YoY basis at INR 8,211 Mn (-5.9% QoQ). EBITDA was 2.8% higher than estimated due to further lowering of input costs. EBITDA margin contracted by 19 bps YoY/ 39 bps QoQ to 19.3%. For 9MFY24, EBITDA grew by 17.4% YoY while EBITDA margin expanded by 222 bps YoY. PAT for the quarter was INR 5,564 Mn, a decline of 40.3% YoY/ 5.3% QoQ, impacted on a YoY basis due to exceptional items in Q3FY23. Adj. PAT was flat YoY and declined by 4.8% QoQ due to the muted topline. Adj. PAT was 3.0% higher than our estimate aided by better operating performance. For 9MFY24, PAT was INR 16,015 Mn, a decline of 9.2% YoY. Adj. PAT grew by 15.6% YoY to INR 16,044 Mn. BRIT is focusing on driving volume growth and gaining market share through a combination of price cuts, grammage addition, innovations, brand investments, distribution expansion, and higher growth in the non-biscuit portfolio. As a result, the Management believes that the EBITDA margin has likely peaked. We believe BRIT will see high single digit/ low double-digit revenue growth in the next 2 years along with range-bound margins driven by operating efficiencies, premiumization and cost rationalization.

Outlook

We revise our FY24E/ FY25E Adj. EPS estimates by +2.5%/ 0.4%, respectively as we factor in a high-single-digit revenue growth in FY25E along with largely stable margins. We introduce our FY26E estimates and expect a Revenue/ EBITDA/ Adj. PAT CAGR of 7.7%/ 11.1%/ 12.2% respectively over FY23-FY26E. The stock is currently trading at 55.0x/ 48.6x/ 43.1x our FY24E/ FY25E/ FY26E Adj. EPS, respectively. We apply a P/E multiple of 47.0x to FY26E EPS of INR 114.2 (50.0x to FY25E EPS of INR 101.1 previously) and arrive at the target price of INR 5,367 per share (INR 5,094 per share previously), implying an upside of 8.9% over the CMP. Accordingly, we maintain our “ACCUMULATE” rating on the shares of Britannia Industries.

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