Accumulate Britannia Industries; target of Rs 6080: Prabhudas Lilladher

Prabhudas Lilladher recommended accumulate rating on Britannia Industries with a target price of Rs 6080 in its research report dated August 05, 2024.

Anil Kothuri

August 06, 2024 / 11:55 IST

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Prabhudas Lilladher's research report on Britannia Industries

We upgrade BRIT from Hold to Accumulate and increase FY25/26 EPS estimates by 2.7% led by 1) high single digit volume growth with double digit exit volume growth in 1Q25 2) Higher profitability due to Ranjangaon unit being considered as ultra-Mega project and PLI gains in UP and Bihar Units 3) Sustained traction and 1.25x growth in rural India than Urban India 4) Success of innovations and adjacencies in Bakery and Dairy. BRIT is looking at 5% RM inflation led by Flour, Milk and Sugar, which might require some price hikes in coming quarters. Innovation pipeline remains strong as BRIT launched pure magic stars, 5050 golmaal butter garlic biscuits even as earlier innovations like Jimjam Pops, Treat and 50-50 Gol Maal sustained traction. Despite higher gains from PLI and Ranjangaon project linked incentives, we expect flattish margins as BRIT will focus on volume led growth. Long-term drivers led by innovations, Focus on adjacencies, rural distribution and GTM initiatives remains on track.

Outlook

We estimate 10.5%/13.1% sales and PAT CAGR over FY24-26. We value the stock at 50x Sep’26EPS and assign a target price of Rs6080 (Rs5315 earlier). Accumulate for medium term gains.

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