Way2Wealth continues to remain positive on Britannia Industries and has recommended investors to HOLD the stock, in its research report.
Way2Wealth's report on Britannia Industries
Britannia Industries is a major player in the ready to eat food segment with leadership position in Bakery category. Its brand portfolio includes Tiger, Marie Gold, Good Day, 50:50 and Treat.
The Company's plants are situated in Kolkata, Delhi, Chennai, Mumbai and Uttarakhand with the current capacity at 148,800 MT. The capacity is expected to increase by ~ 30,000 MT by the end of FY11( awaiting annual report to confirm actual expansion).
The company currently has 31% market share in the biscuit segment.
The company has moved from a biscuit company to bakery products company in FY08. In two years there is a structural change in company’s revenue mix from 90%+ biscuit contribution to revenue to currently 77%. Britannia made its strong presence felt in dairy this year and forayed into ready to eat Indian breakfast market. We expect this new initiative to start yielding results from FY12.
Company’s product categories are all growing at 25%+ while the overall industry is growing at 16%+.
"At the CMP of Rs 391.45 the stock trades at 22.35x its FY12E EPS of Rs 17.4 respectively. The company is trading at hardly 1x its market cap to sales. We believe the Q4 results suggests that the worst is over. Margins hereon will stabilize and improve going into FY12 on the back of better agriculture output. The new products launches in the breakfast category will further lower dependence on the biscuits category & help in volume growth in business. We initiate coverage on stock with a "Buy" recommendation with a price target of Rs 480/- in the next 1-1 ½ years. We continue to remain positive on the stock and recommend investors to HOLD the stock", says Way2Wealth research report.
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