MOSL: BRITANNIA INDUSTRIES (Buy)-Sales broadly in-line-margins far better than expectations
​Britannia Industries: Sales broadly in-line; margins far better than expectations
(BRIT IN, Mkt Cap USD6.1b, CMP INR3419, TP INR4050, 18% Upside, Buy)
- BRIT’s consol. sales grew 5.2% YoY (est. of +7%) in 4QFY17. Standalone sales rose 6.6% YoY, but subsidiary sales fell 11% YoY, likely due to weak performance in the Middle East. Biscuits volume growth was 2% (est. of +3%), but this was on a base of 10% growth in 4QFY16. EBITDA grew 6.1% YoY (est. of -4.2%) to INR3.1b. Adj. PAT grew 5.9% YoY (est. of -3.3%) to INR2.1b.
- Consol. gross margin contracted 160bp YoY (est. of -260bp) to 38% due to commodity cost inflation. There was a decrease in other expenses by 170bp YoY to 20.3% and in staff costs by 10bp YoY. Consol. EBITDA margin thus expanded 10bp to 13.7% (est. of 11.4%) in 4QFY17.
- Standalone performance: Sales, EBITDA and adj. PAT grew 6.6%, 7.2% and 2.5% YoY, respectively, in 4QFY17. Gross margin of 37.8% contracted 150bp YoY, while operating margin of 13.7% expanded 10bp YoY.
- FY17 performance: Consolidated sales grew 7.5% YoY to INR89.8b. PAT rose 7.3% YoY to INR8.8b. Gross margin shrunk 220bp YoY, but EBITDA margin contraction was restricted to 60bp to 13.3%.
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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