Buy Britannia Industries: target of Rs 4200: Sharekhan

Sharekhan is bullish on Britannia Industries has recommended buy rating on the stock with a target price of Rs 4200 in its research report dated February 25, 2021.

Broker Research

February 26, 2021 / 01:01 PM IST

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Sharekhan's research report on Britannia Industries

Britannia Industries’ (Britannia’s) underperformance versus broader indices (13% absolute return vs. Nifty return of 34% and Nifty consumption of 26%) in the past one year; leadership position in biscuits category and steady earning visibility make it a better pick in the consumer goods space. Market share gains in biscuits category, strong growth in Hindi-speaking belt, product innovation and a wider distribution network will be key growth drivers in the near to medium term. Strong traction in adjacencies will add to overall revenue growth in near future. Focus on cost-savings helped OPM improve to 16% in FY2020 from 9% in FY2014; going ahead efficiencies, cost saving measures and premiumisation would help OPM to improve to ~20% by FY2023E.

Outlook

Stock trades at 35x its FY2023E EPS, at a discount to some large consumer goods stocks. Current underperformance provides good entry point; we recommend Buy with an unchanged price target of Rs. 4,200.

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