Buy Britannia Industries; target of Rs 3475: Sharekhan

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Sharekhan's research report on Britannia Industries

Britannia Industries (Britannia) posted steady operating performance in Q4FY2019. Consolidated revenue grew by 10.3% and OPM stood flat at 15.6%. Volume growth of the domestic business was sustained at 7%. Innovation in core categories/adjacencies, distribution expansion and enhancing international presence remain the key earnings growth levers going ahead. Volume growth is expected to stay at 7-8% in the near term. Raw-material cost inflation expected to be ~4% in FY2020; prudent price hike, better revenue mix and operating efficiencies to help OPM improve by 70-100 BPS going ahead.

Outlook

Trimmed earnings estimates for FY2020/FY2021 by 3.7%/4.4% to factor in little softness in sales volume; Maintained Buy with a revised PT of Rs. 3,475.

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