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Britannia Industries 3QFY2013 performance highlights and results update

Contributed by Angel Broking

For 3QFY2013 Britannia Industries (Britannia) posted a 5.3% yoy growth in bottom-line to Rs.57cr, which is in-line with our estimate. The modest performance on the bottom-line front was on account of a steep increase in prices of raw materials, hike in freight charges and higher advertisement and promotion (A&P) expenses.

Key highlights for the quarter: Britannia posted a 16.5% yoy growth in the standalone top-line to Rs.1,453cr, which is in-line with our estimate. The top-line growth was due to a combination of higher volumes (up 5-5.5% yoy), higher pricing (5% yoy) and superior product-mix (5% yoy). The company’s strategy of extending its brands in premium categories and continuous focus on increasing value-added products in its overall sales mix resulted in better product mix and realization. OPM fell by 116bp yoy to 5.4% due to a steep increase in the prices of raw materials (such as wheat and sugar), higher freight charges (due to increase in diesel costs) and also increase in A&P/ sales ratio (up by 143bp yoy).

Outlook and valuation: We expect Britannia to post a revenue and bottom-line CAGR of ~13.9% and 17.8% respectively over FY2012-14. At the current market price, the stock is trading at 22.6x FY2014 EPS; we recommend Buy on the stock with a target price of Rs.564.