MOSL: BRITANNIA INDUSTRIES (Downgrade to Neutral)-Largely in-line-weak near-term outlook, expensive valuations prompt rating downgrade
BRITANNIA INDUSTRIES: Largely in-line; weak near-term outlook, expensive valuations prompt rating downgrade
(BRIT IN, Mkt Cap USD10.7b, CMP INR3195, TP INR3458, 8% Upside, Downgrade to Neutral)
- At the consol. level, BRIT delivered growth of 6.2% YoY in sales (INR30.5b v/s est. of INR31b), 8.3% YoY in EBITDA (INR4.9b v/s est. of INR4.8b), 9% YoY in PBT (INR5b v/s est. of INR4.8b) and 33.2% YoY in PAT (INR4b v/s est. of INR3.2b) in 2QFY20. Standalone sales were up 7.1% YoY to INR29b, with base business volume growth of ~3% YoY (our estimate: +4%).
- gross margin expanded 10bp YoY to 40.2%. EBITDA margin expanded 30bp YoY to 16.1% (highest-ever) led by lower other expenses (-50bp YoY), partly offset by higher staff cost (+30bp YoY).
- For 1HFY20, consol. sales/EBITDA/PAT grew 6.2%/5.1%/19% YoY.
Britannia Industries is a food-products corporation based in India. Co.'s principal activity is the manufacture and sale of biscuits, bread, rusk, cakes and dairy products. Co. manufactures and distributes products such as biscuits, high protein foods for children as well as digestive-aided ingredients for older adults, convenience foods such as powdered dairy creamers, breads, cookies, snack-cakes and rusk, crackers, cheese, marine products and other related food products. Co.'s brand of products include Tiger, Mariegold, Treat, 50-50, Good Day, Milk Bikis, Little Hearts, Pure Magic, NutriChoice Bread and Milkman.
Motilal Oswal Financial Services Ltd. is a reputed name in Financial Services and Online Trading with group companies providing services such as Private Wealth Management, Retail Broking and Distribution, Institutional Broking, Asset Management, Investment Banking, Private Equity, Commodity Broking, Currency Broking, Principal Strategies & Home Finance.
Motilal Oswal Securities is a group company of Motilal Oswal Financial Service Limited which started as a stock trading company and has blossomed into well diversified firm offering a range of financial products and services. Motilal Oswal has built a reputation as the source for best stock trading company and this has taken a wealth of experience, knowledge and expertise, constantly working in tandem, over the years.
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