Accumulate Britannia Industries; target of Rs 6350: Dolat Capital
Dolat Capital recommended accumulate rating on Britannia Industries with a target price of Rs 6350 in its research report dated November 13, 2018.
November 19, 2018 / 04:16 PM IST
Dolat Capital's research report on Britannia Industries
Q2FY19 results came marginally ahead of our estimate. The company posted 12% volume growth in the base biscuit business – double digit volume growth in the fourth consecutive quarter. 230/100bps expansion in GM/EBITDA margin was driven by deflation in key commodity prices. In addition, strong double digit growth in the IB was encouraging. We believe that the company is on the right track to grow the business and improve profitability with expanding distribution reach, increasing in-house manufacturing and controlling operational overheads. Furthermore, better monsoon this season and changing macros should help.
We have tweaked our FY19E and FY20E earnings estimate at ` 99.3 and ` 122.1 respectively to factor in Q2 performance and increase in RM prices. Continue to value at 52x FY20E EPS to arrive at a TP of ` 6,350. Maintain Accumulate.
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