Buy Britannia Industries: target of Rs 4200: Sharekhan

Sharekhan's research report on Britannia Industries

Britannia Industries Limited (Britannia) registered a mix-bagged performance in Q4FY2021, with revenue growth of 8.2% (volume growth of 8%), while OPM expanded by just 30 bps to 16.1% (less than street expectation) due to higher ad spends; PAT declined by 3%. In the second wave of COVID-19 surge, the company was well prepared with production and distribution of products. Demand environment is stable, but the company is monitoring the same on week-to-week basis. The company is targeting to achieve low double-digit volume growth, driven by market share gains and distribution expansion in the back drop of normal economic environment. OPM is expected to remain high because of efficiencies through cost-saving initiatives. We broadly maintain our earnings estimates for FY2022/FY2023.

Outlook

The stock has corrected by 7% in the past three months and is trading at 36x its FY2023E earnings. We maintain our Buy on the stock with an unchanged PT of Rs. 4,200.