Motilal Oswal is bullish on Britannia Industries has recommended buy rating on the stock with a target price of Rs 3630 in its research report dated February 11, 2019.
Motilal Oswal's research report on Britannia Industries
Consol. sales grew 10.7% YoY to INR28.4b (our estimate: INR28.1b) in 3QFY19. Base business volume growth stood at 7% YoY (our estimate: 6% YoY). EBITDA increased 13.4% YoY to INR4.5b (our estimate: INR4.5b), while PAT grew 14.1% YoY to INR3b (our estimate: INR3b). Consol. gross margin expanded 260bp YoY to 41.3%. RM inflation was at 4%, with inflation in flour (9%) and refined palm oil (RPO; 10%) marginally offset by deflation in sugar and milk. EBITDA margin expansion was restricted to 40bp YoY to 15.9% (our estimate: 16.1%) due to higher other expenses (+180bp YoY to 21.3%) and staff costs (+50bp YoY to 4.1%).
We maintain Buy with a TP of INR3,630 - 52x FY21E EPS, a 10% premium to three-year average, with EPS expected to grow faster (CAGR: 20.1%) over FY19-21 than over FY16-19 (12.1%).
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