Emkay Global
Britannia Industries (Buy)
CMP: ₹3,372.5
Target: ₹3,900
We increase Britannia’s (BRIT) estimates by 12 per cent and raise our TP to ₹3,900 (from ₹3,250), factoring in stronger-than-expected growth trends in its portfolio, acceleration in market share gains and multiple tailwinds for higher growth and margin expansion.
BRIT is emerging as the biggest beneficiary from the disruption, as packaged foods consumption is growing strongly, led by higher in home consumption and lesser avenues for out-of-home consumption. The shift from unorganised/street food to packaged foods may sustain even post lockdown given higher preference for hygiene and trusted brands.
In addition, BRIT’s better distribution capabilities with strong direct reach, wide portfolio and faster innovation makes it well-placed to accelerate share gains. Margin outlook has also improved on benign input prices, steady cost-saving culture, reduced competitive activity (reduction in trade schemes) and better portfolio mix
Valuations at 41xFY22 are still attractive given the improved growth outlook and likely upsides to earnings. Reiterate ‘buy’ and maintain BRIT as an EAP high conviction idea.