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Axis Securities
Britannia (Buy)
Target: ₹4,170
CMP: ₹3729.70
Britannia Industries (BRIT), a Wadia Group company, owns some of the largest food brands like Good Day, Tiger, NutriChoice, Milk Bikis, Marie Gold, 50:50 etc. in the biscuits segment.
While the demand momentum moderated in H2FY21 vs H1FY21, we believe recent lockdowns across various States augurs well for the biscuits category given likely improvement in the in-home consumption trend. Biscuits/rusks are reporting healthy performance with rusks doing better than biscuits. Dairy and international portfolio excluding drinks is doing well. Down-trading is visible in the market, but Britannia has not lost market share.
Management has also mentioned as biscuits are the cheapest snacking option, there could be a possibility of share gains from other snacking categories. In the current scenario, general trade has done well mainly in rural regions against Modern Trade (MT) which was adversely hit by lockdown restrictions and limited hours of store operations. With manufacturing constraints being reported in current times, Britannia is looking to augment its capacity at Odisha and Ranjangaon plants by putting additional lines. It plans to set up manufacturing facilities in Tamil Nadu, Uttar Pradesh and Bihar. The company targets to achieve ₹1,500 crore capex by FY23 and will gain an incentive of 110 per cent from the Maharashtra government.
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