Weekender MAY 22, Outlook This Week:

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1 Index Closing Weekly Chg Weekly Chg % Sensex % Nifty % Auto % Bankex % Cap Goods % Cons Durables % Metal % Oil & Gas % PSU % TECH % TOP GAINERS Closing Weekly Chg Weekly Chg % HCL TECH % TECH MAHINDRA % ULTRTECH CEMENT % SUN PHARMA % BAJAJ AUTO % Weekender Outlook This Week: MAY 22, 2015 IOC, BPCL, HPCL have increased the retail price of petrol by Rs 3.13 a litre and diesel by Rs 2.71 a litre citing sharp increase in international prices. CNG price in Delhi will go up by 45 paisa to Rs 38 per kg in Delhi while the same in Noida, Greater Noida and Ghaziabad will increase by 50 paisa to Rs per kg, Indraprastha Gas Ltd ( IGL) said in a statement. Goldman Sachs sees average 2015 Brent crude price at $58 per barrel from $52 per barrel earlier; sees 2016 price outlook at $62 per barrel from $70 per barrel earlier. Goldman Sach, in a note published on Saturday, raised its projection for the average Brent crude oil price this year to $58 a barrel from $52 and lifted its outlook for US light crude futures to $52 a barrel from $48. But Goldman, closely followed by investors including large pensions and hedge funds, said it expects Brent to fall over time, reaching $55 a barrel by Global Funds, Asia-Pacific Funds and Emerging Market Funds are overweight on India by 120 to 500 basis points (bps) compared with their benchmark indices. For instance, these EM funds have parked 10.9% of their money in India as against a country weight of 6.7% in the MSCI EM Index a widely tracked index by fund managers. TOP Weekly Weekly LOSERS Closing Chg Chg % TATA STEEL % IDEA CELLULAR % BOB % VEDANTA % SBI %. Currency Rates Price as on date USDINR EURINR GBPINR JPYINR Stock Specific news: Essel Group said it has entered into an agreement with China's energy firm JA Solar to launch a joint venture for manufacturing solar cell and modules in India. The JV company will set up a manufacturing facility in India with an estimated capital expenditure of US 150 million (Rs 950 crore) out of which USD million (Rs 190 to Rs 285 crore) will be by means of equity funding. Eros International has tied up with three state-owned entities - China Film Group, Shanghai Film Group and Fudan University - to promote Sino-India films in both the countries.

2 Commodity Spot Prices Research Desk Price as on date Castor seed (100kg) Chana (100kg) 4550 Coriander (100kg) Jeera (30kg) Mustardsee d (100kg) Soy bean (100kg) 3850 Economic Events Date Event Forecast Previous 26th May 26th May 29th May 29th May 29th May 29th May USD Consumer Confidence (MAY) 95.2 India Current Account Q1 $ -8.6B $-8.2B USD Gross Domestic Product (Annulzd.) (1Q S) USD Gross Domestic Product Price Index (1Q S) 0.2% -0.1% India Infrastruc. Output YoY APR -0.10% India GDP Growth Rate YoY Q1 8.16% 7.50% Power Grid Corporation has got shareholders' approval to raise up to Rs 13,000 crore from domestic and external sources during the current fiscal. Bharti Airtel Ltd, is in advanced talks to buy out Auger Wireless Broadband India for about Rs 150 crore to consolidate its 4G high-speed broadband footprint ahead of Reliance Jio Infocomm's launch. Private equity majors Bain Capital and Baring Asia are vying for a sizable minority stake in L&T Finance Holdings as the listed financial services arm of construction and engineering services conglomerate L&T looks to raise up to $500 million (Rs 3,200 crore). State Bank of India on Wednesday signed a Memorandum of Understanding (MoU) with ecommerce player Amazon to develop payment and commerce solutions for customers and small businesses. Reliance Jio Infocomm is rolling out physical office infrastructure across 880 cities and towns with its 4G services launch preparations entering the final stages. Bharti Airtel, which has already launched 4G services in various circles, is best positioned to respond to the upcoming launch of services by Reliance Jio Infocomm (RJio), says a report. SpiceJet has announced that it has registered a rise of 400% in booking volume on the first day of the fare sale as compared to a normal day. SpiceJet, which completes ten years of flying this week, launched a special three-day discount offer called the CelebrationSale with fares starting as low as Rs 1,010 all-inclusive on Tuesday. Cadila Healthcare, the Zydus Cadila Group flagship, has emerged the front runner to acquire the generic sterile injectables business of Ahmedabad headquartered Claris Lifesciences (CLL) for Rs crores trumping several domestic and global peers who were also interested in the assets. Tata Steel, which reported a massive Rs 5,674 crore loss in the March quarter due to noncash write downs, on Wednesday said it will spend Rs 10,000 crore in capex this fiscal as it hopes demand conditions to improve over the next few quarters. Bharti Airtel on Saturday said it has received financing commitments of up to USD 2.5 billion from China Development Bank and Industrial and Commercial Bank of China, with an average maturity of about nine year. Vishal Sikka from Infosys, however, said that Indian IT firms faced a massive growth opportunity in China, and that Infosys was hoping to increase its revenues from the country from the current USD 120 million to USD 1 billion over the next few years. Tata Motors Ltd reported a growth of 4 percent in global sales, including Jaguar Land Rover's at 77,701 units in April. 2

3 Wockhardt said a product from its new drug discovery programme, which aims to treat pneumonia, has received QIDP status from the US health regulator. Strides Arcolab is acquiring Aspen's generic pharma business in Australia with certain branded pharma assets at USD million. The acquisition will make Strides one of the top three generic pharma suppliers and one of the top 10 pharma companies in Australia. After five months of negotiations and competitive bidding, the Warburg-General Atlantic combine is said to have outmanoeuvred several global banks, financial services companies and heavyweight private equity peers to emerge as the frontrunner to buy Sharekhan brokerage firm for a valuation of Rs 2,300-2,400 crore. Tata Group's hospitality arm Indian Hotels Co Ltd, which runs a chain of luxury hotels and resorts under the Taj brand, plans to delist its Global Depository Receipts (GDRs) from London Stock Exchange, two decades after it started trading on the bourse. Outlook Next week: Indian market expected to be volatile with downside on the back of the hope of rate cut by the RBI in its forthcoming monetary policy as the macro economic data are conducive for a rate cut. Results slated for next-week are: Canara bank, Jyothy Lab, BHEL, BOI,Dish TV,HPCL, TATA Motors, Thermax Tech Mahindra, BATA, Gail,Godrej Ind, BPCL,Bajaj Electrical, Coal India,IGL, ONGC, REC,Berger Paints, IOCL, Oil Inida, M&M, Just dial, Sun Pharma and BEL. 3

4 BRITANNIA INDUSTRIES Current Price 2431 Target Price 2850 Upside 17.24% Duration 12 months STOCK DATA BSE Code NSE Code INE216A01022 Market Cap (Crores) Face value 2 52 week H/L / Company Overview Britannia, one of the India's biggest brands of the country, has a market share of over 33%. More-than-a-century old Britannia has launched big brands in FMCG Segment. The company is expanding its customer base by launching new products and renovating existing ones. The company has created powerful brands like Marie gold, Good day, Milk Bikis, Bourbon, Nutri Choice etc. which has grown leaps and bounds since launch; aiding significant market share for the company. Britannia Industries Limited (BIL) is a major player in the Indian Foods market with leadership position in Bakery category. It launched various brands in biscuits, bread, cake & rusk business. It has launched brands like Tiger, Britannia 50:50, Good Day, Britannia Treat, Marie & many more. The Company was born in 21st March of the year 1918 as a public limited company. The Company's plants are situated in Kolkata, Delhi, Chennai, Mumbai and Uttarakhand. In 1921, it became the first company east of the Suez Canal to use imported gas ovens. The primary business segment of the Company is Foods comprising (i) bakery products - biscuits, bread, cakes and rusk, and (ii) dairy products milk, butter, cheese, ghee and dahi. The company's offerings are spread across the spectrum with products ranging from the healthy and economical Tiger biscuits to the more lifestyle-oriented Milkman Cheese. Having succeeded in garnering the trust of almost one-third of India's one billion population and a strong management at the helm means Britannia plans to continue to dream big on its path of innovation and quality. And millions of consumers will savour the results, happily ever after. The company is expanding its customer base by launching new products and renovating existing ones. Britannia s brands now have greater availability in rural markets and pervasive presence in modern trade. Bakery and dairy products maker Britannia Industries reported a per cent increase in its consolidated net profit at Rs crore for the quarter ended March 31,

5 Shareholding Pattern (31/03/2015) Category % of equity Foreign Promoters 50.75% MF s/uti 5.21% FII s 19.10% Public 24.78% Fin inst/banks 0.16% Total 100% Strengths and opportunities Company has been increasing focus on in-house larger and technologically superior manufacturing. Use of better productivity enhancing tools like Kaizen, TQM, Lean has been improving manufacturing efficiency and reducing waste. Continuous cost containment measures like use of biomass as a fuel and use of energy efficient ovens has resulted in energy optimization. Further, company has rationalized its stock keeping units (SKUs) and has improved stock freshness in Biscuits, Cakes and Rusks with the increase in their shelf life. Britannia has been focusing on increasing its penetration in untapped market through various measures like advertising, brand building etc. The company has increased its depth of distribution in urban markets through split route strategy. Total line sold has increased by 25%. Similarly, in rural areas the company has increased its width of distribution through hub and spoke model thereby number of rural distributor increased by 20%. The company is gaining share in the desired segments and is increasing focus on large core categories. Company has created powerful brands like Marie gold, Good day, Milk Bikis, Bourbon, Nutri Choice etc. which has grown leaps and bounds since launch; aiding significant market share for the company. It also plans to build its new innovation funnel with the launch of new products going forward; benefitting from the loyalty of its consumer s. 5

6 Britannia plans to use ORGANOLEPTICS model (which means blind testing of products on eight sensory attributes) for the launch of product; clearance of the test by the product ensures high success rate. Britannita s innovation journey has now begun with the launch of NutriChoice Heavens; a super-premium offering; the company had marked its entry into the mass cookie space with Tiger Butter Krunch. Company has tied up with e-tailer Amazon India for a pilot launch of 'Good Day' Chunkies, a new chocolate chip cookie, for 15 days. Britannia is the first biscuit company in the country to leverage e-commerce for brand promotions, ahead of competitors such as Parle Products and Mondelez. The company plans to continue to launch new products in the coming months. Company is growing at CAGR of 14% from last 5 years, more than industry average along with its OP and NP, both growing approximate in range of 40-50%. (see Table 1.1) Table CAGR Sales % Operating Profit % Net profit % The company has reduced the debt in last 5 years with D/E of 1.90 in 2011 to 0.13 in 2015, massive reduction of debt, shows sign of very healthy company (see Table 1.2) Table Total Debt Total Equity D/E Results snapshot Britannia's net sales rose to Rs crore during the quarter, up 13.86% against Rs crore in the same period of previous fiscal. Quarter ending March 2015, the company's net profit was also up 55.35% to Rs crore as against Rs crore in the year-ago period. Net sales during were also up 13.68% to Rs crore as against Rs crore a year ago. During fiscal, the company's net profit was also up 74.18% to Rs crore as against Rs crore in the year-ago period. VALUATION For FY 2016, we expect the company to register Net sales and PAT of Rs 8739 crores and Rs 481 crores.. This gives an EPS of Rs approximately. Current market price of Rs 2431 discounts FY 2015 projected earnings by times. Buy at CMP of with target price of Rs 2850 approximate 17.24% increase in next 12 months. 6

7 CHART:- Terms used : FCF : Free cash flow TTM : Trailing twelve months RONW : Return on net worth ROE : Return on Equity ROCE : Return on Capital Employed EV/EBIDTA = Enterprise value / Earnings before interest, depreciation, tax and amortization P/E = Price to earnings ratio EPS = Earnings per share BV = Book value PBT = Profit before tax PAT = Profit after tax OPM = Operating profit margin 7

8 Disclosures: (a) The research analyst or research entity or his/their associates or his/their relatives do not have actual/beneficial ownership of one per cent or more securities of the subject company or any financial interest in the subject company (b) The research analyst or research entity or his/their associates or his/their relatives do not have any other material conflict of interest at the time of publication of the research report or at the time of public appearance (c) The research analyst or research entity or its associates have not received any compensation for investment banking or merchant banking or brokerage services nor received any compensation for products or services from the subject company in the past twelve months (d) The research analyst or research entity or its associates have not received any other benefits from the subject company or third party in connection with the research report (e) The subject company is not or was not a client during twelve months preceding the date of distribution of the research report and the types of services provided by the research analyst or research entity or his/their associates or his/their relatives (f) The research analyst has not served as an officer, director or employee of the subject company (g) The research analyst or research entity has not been engaged in market making activity for the subject company 8

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