Purchase Britannia Industries with a Rs. 5250 goal, suggests Emkay Global Financial

 Purchase Britannia Industries with a Rs. 5250 goal, suggests Emkay Global Financial

In its research report dated November 02, 2023, Emkay Global Financial expressed its bullishness on Britannia Industries and suggested a buy recommendation on the company, with a target price of Rs 5250.

Britannia Industries analysis report from Emkay Global Financial

Thanks to the management's focus on maintaining profitability and growing TAM (now at about Rs. 1 trillion, or 11% of the Indian packaged food and beverage industry), we have maintained our favorable position on Britannia. In the near future, the emphasis will probably be on increasing penetration for cakes, wafers, and dairy goods while boosting consumption in already-penetrated areas (biscuits, bread, and rusk). Britannia has delivered a disappointing topline show with 1% revenue growth (0.2% volume growth) as a result of the turned off demand setting, high revenue base, and surge in regional competition; however, it surprised advantageously on EBITDA margin (up 340bps YoY to 19.7%), which enabled the company to clock 23% EBITDA as well as 19% adj. PAT growth.

Prospects

Taking the demand pressures into account, we reduced topline by 3% for FY24E. With a fresh Sep-24E TP of Rs5,250 (on 48x PER), we continue to recommend BUY.