Arihant Capital has given Hold recommendation for Britannia Industries with a target price of Rs. 3671 in its research report issued on May 05, 2022

Arihant Capital’s research report on Britannia Industries

The overall performance of the company was largely in line with expectationswith the growth being dulled but positive. This is due to the inflationary pressures faced by the company. Material costs are at an all-time high, and a price hike was passed on mostly through grammage cuts. Volume growth was on the softer sidemid single digits, at 4-5%. Britannia’s Q4FY22 Revenue grew by 15.48% YoY to INR 3,508 Cr (-0.63% QoQ). This beat our quarterly revenue estimate of INR 3,433 Cr by 2.19%. Q4FY22 Gross Margin contracted by 136bps YoY 37.3% (16bps QoQ). Q4FY22 EBITDA grew by 6.14% YoY to INR 604 Cr (1.46% QoQ). EBITDA Margin contracted by 151bps YoY to 17.2% (35bps QoQ). This beat our quarterly EBITDA estimate of INR 557 Cr by 8.35%, and also beat our EBITDA Margin estimate of 16.21%. Q4FY22 Consolidated PAT grew 4.84% YoY to INR 381 Cr (3.03% QoQ). PAT Margin contracted by 110bps YoY to 10.86% (39bps QoQ). This beat our quarterly PAT estimate of INR 342 Cr by 11.44%.

Outlook

We assign a TP of INR 3,671 to the stock, valued at a P/E multiple of 49x on the FY24E EPS of INR 73.8. The company has clocked in stable revenue growth and profits despite the harsh inflationary situation; through judicious pricing action and cost optimization measures. It has also gained market shares from its competitors and continues to win in the glucose biscuit segment. A diver for future growth will be the adjacent businesses which have been clocking in impressive double digit growth. At current levels we recommend that investors Hold the stock.

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