Broker's call: Britannia Ind (Buy)

Updated on: Nov 10, 2021
image caption

IDBI Capital

Britannia Ind (Buy)

Target: ₹4,507

CMP: ₹3,697.10

Britannia Industries (BRIT) Q2-FY22 result was below our estimates. Revenue growth at 6 per cent y-o-y on a high base of 12 per cent is healthy. However, a steep contraction in gross margin led to a higher than expected decline in PAT.

Positively, BRIT expects to offset the impact of inflation both by taking price hikes (to the tune of 1/3rd) and grammage reduction (2/3rd) by the end of FY22. During Q2-FY22 Britannia has taken a 4 per cent price hike and expects benefit from grammage reduction to flow in H2-FY22. Distribution expansion is tracking well.

BRIT expects rural to outperform urban through distribution expansion and penetration. In rural; market share gains stood at 2.5x vs urban during Q2-FY22. Modern trade grew 10 per cent higher than the traditional channel. However, the company expects lower volume growth due to inflation and reduction in grammage during H2-FY22.

Accordingly, we have trimmed our EPS estimate by 6-13 per cent during FY22-23. We have introduced FY24 in our estimates. We maintain our bullish view on the company. We maintain Buy rating and our revised target price stands at ₹4,507 (vs previous TP of ₹4,351).

Published on November 10, 2021

Follow us on Telegram, Facebook, Twitter, Instagram, YouTube and Linkedin. You can also download our Android App or IOS App.

This article is closed for comments.
Please Email the Editor

You May Also Like

Recommended for you