v-17 Dec-17 Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18 Jul-18 Aug-18 Sep-18 Oct-18 v-18 Q2FY19 Result Update Q2FY19 Result Update BUY CMP (Rs) 5,813 Target Price (Rs) 6,519 Potential Upside 12.1% Sensex 35,144 Nifty 10,583 Key Stock data BSE Code 500825 NSE Code Bloomberg BRITANNIA BRIT:IN Shares o/s, Cr (FV 2) 24.0 Market Cap (Rs Cr) 69,870 3M Avg Volume 1,82,013 52 week H/L 6,934/4,400 Shareholding Pattern (%) Mar-18 Jun-18 Sep-18 Promoter 50.7 50.7 50.7 FII 17.1 17.4 16.5 DII 12.7 12.0 12.6 Others 19.6 19.9 20.2 1 Year relative price performance 150 135 120 105 90 Research Analyst Nirvi Ashar, MBA nirvi.ashar@religare.com Britannia Nifty 50 Positive momentum continues Britannia Industries Ltd (BRIT) reported in-line numbers for Q2FY19. Its revenue grew by 12.7% yoy driven by double digit volume growth. The company s EBITDA margins improved by 100bps on back of premiumization and cost cutting initiatives. However, its PAT margin improvement was restricted to 30 bps yoy due to increase in depreciation, interest, tax expense and decrease in other income. Going forward, we remain positive on company s growth prospects, as we believe it would continue to focus on growing its volumes & revenue in double digits on back of rising demand, innovative & renovating its products and increasing distribution reach in states where it has weak presence. We maintain a BUY on the stock with price target of Rs 6,519. Q2FY19 Result Update: BRIT reported revenue growth of 12.7% yoy to Rs 2,869.6 cr driven by double digit volume growth of 12%. During the quarter, the company continued its innovation and premiumization of products in domestic business. Further, its constant efforts of widening distribution network through direct reach, increasing presence in rural market and in states where the company has weak presence have led BRIT to post healthy growth in Q2FY19. Also it has entered two new categories, Cream Wafers and Flavored Milk Shakes, which would help the company in taking a step forward towards achieving its goal to be a Global Total Food Company. Despite slow growth in geographies like Middle-east and Africa, the company s international business showed strong double digit growth during the quarter. Moreover, the company is looking for expansion in Nepal, (likely to commission Greenfield plant in FY19), as per its plan of expanding footprints in international markets every year. During Q2FY19, its Gross profit margins improved by 228 bps yoy due to operational efficiency and volume led growth. Further, improvement in EBITDA margins by 100bps to 15.8% was on account of company s constant efforts towards controlling cost and innovating premium products. However it s PAT margin increased just by 30bps because of increase in depreciation (+9.8% yoy), interest (+72.9% yoy), tax expense (+17.8% yoy) and lower growth in other income (-13.5% yoy). Other Key Highlights: 1) Inflation of around 4% was witnessed in raw material prices. 2) Price hike would be taken in the coming quarters by around 3.5-4% 3) Greenfield project in Nepal to get commissioned in Q4FY19. 4) New launches continued in Biscuits (Good-day, Tiger and Pure Magic), Dairy (dairy whitener) and Cake segments during the quarter. 5) Management plans to launch more products in H2FY19. 6) BRIT has announced stock split of equity share of face value of Rs 2 to Rs 1 per share (ex date - 29th v-18). Outlook & Valuation: BRIT s continued its strong growth momentum in Q2FY19. Its overall H1FY19 revenue grew by 10.8% yoy, driven by healthy volume growth and product mix. During the same period, the company s EBITDA and PAT margins improved by 113bps and 60bps, on back of cost saving initiatives and premiumization of products. Further, we believe BRIT would grow at the same pace in H2FY19. We estimate BRIT s revenue and PAT to grow by 13.6% & 19% CAGR respectively over FY18-20E, led by healthy outlook of Indian biscuit segment, steady capacity addition, improved product mix, increasing direct distribution reach, continued efforts towards renovating & innovative products and cost saving efforts. We maintain a Buy on the stock with target price of Rs. 6,519. Financial Summary - consolidated Particulars, Rs cr FY17 FY18 FY19E FY20E Net revenue 9,324.1 9,990.1 11,205.2 12,886.0 EBITDA 1,278.2 1,501.7 1,837.7 2,154.9 EBITDAM (%) 13.7 15.0 16.4 16.7 APAT 884.3 1,004.0 1,216.5 1,421.6 APATM (%) 9.5 10.0 10.9 11.0 EPS (Rs) 73.7 83.7 101.4 118.5 PE (x) 78.8 69.4 57.3 49.0 RoE (%) 32.8 29.5 28.5 27.0 vember 14, 2018
P&L Account - consolidated Particulars (cr) Q2FY19 Q2FY18 Y-o-Y % Q1FY19 Q-o-Q % Net Sales 2,869.6 2,545.3 12.7 2,543.8 12.8 Cost of Raw Materials 1,438.7 1,291.4 11.4 1,271.0 13.2 Purchase of Finished Goods 271.4 226.3 19.9 267.5 1.5 (Increase) / Decrease In Stocks 10.3 66.3-84.5-12.1-185.4 Gross Profit 1,149.1 961.3 19.5 1,017.5 12.9 Gross Margins % 40.0 37.8 228bps 40.0 5bps Employee Cost 108.0 107.0 1.0 108.6-0.5 Other Expense 586.7 476.6 23.1 519.5 12.9 Total Expenditure 2,415.2 2,167.6 11.4 2,154.5 12.1 EBITDA 454.4 377.7 20.3 389.4 16.7 EBITDA Margins (%) 15.8 14.8 100bps 15.3 53bps Depreciation 36.9 33.6 9.8 35.6 3.6 EBIT 417.4 344.0 21.3 353.7 18.0 Other Income 44.0 50.8-13.5 42.0 4.6 Interest 2.42 1.4 72.9 2.4-0.8 PBT 459.0 393.4 16.7 393.3 16.7 Tax 155.9 132.4 17.8 135.2 15.3 PAT 303.0 261.0 16.1 258.1 17.4 PAT Margin (%) 10.6 10.3 30bps 10.1 41bps EPS 25.2 21.7 16.1 21.5 17.4
P&L Account - consolidated Net sales 9,324.1 9,990.1 11,205.2 12,886.0 Expenditure Raw material consumed 4,839.6 4,906.1 5,781.9 6,624.5 Purchase of stock in trade 803.3 1,194.7 874.0 1,001.4 (Increase) / Decrease In Stocks (54.2) 6.3 6.7 7.7 Employee cost 352.6 401.6 448.2 515.4 Other expenses 2,104.6 1,979.8 2,196.2 2,512.8 Total expenditure 8,045.9 8,488.5 9,367.6 10,731.1 EBITDA 1,278.2 1,501.7 1,837.7 2,154.9 EBITDAM (%) 13.7 15.0 16.4 16.7 Depreciation 119.3 142.1 173.0 207.1 PBIT 1,158.9 1,359.6 1,664.7 1,947.8 Other income 150.5 166.4 186.6 214.6 Interest expenses 5.5 7.6 8.0 8.4 PBT 1,304.0 1,518.4 1,843.2 2,154.0 Tax 419.7 514.2 626.7 732.4 PAT 884.3 1,004.1 1,216.5 1,421.6 Exceptional - (0.2) - - PAT (after exceptional) 884.3 1,004.0 1,216.5 1,421.6 PATM (%) 9.5 10.0 10.9 11.0 EPS 73.7 83.7 101.4 118.5 Balance sheet - consolidated Share Capital 24.0 24.0 24.0 24.0 Reserves & Surplus 2,672.4 3,382.2 4,239.0 5,241.0 Total Shareholder's Fund 2,696.4 3,406.2 4,263.1 5,265.0 Minority Interest & Capital 4.9 15.1 4.4 4.4 Long term borrowings 31.4 84.6 88.8 93.2 Short term borrowing 84.3 93.7 98.3 103.2 Total Debt 115.7 178.2 187.1 196.5 Deferred tax liabilities (23.1) (22.6) (22.6) (22.6) Long term provision 7.6 8.9 8.9 8.9 Other long term liabilities 23.1 25.2 25.0 25.0 123.3 189.7 198.4 207.8 Current Liabilities Trade payables 757.3 994.1 1,172.2 1,343.0 Short term provisions 226.8 236.6 268.9 309.3 Other current liabilities 276.9 323.7 336.2 386.6 Total liabilities 4,085.7 5,165.3 6,243.2 7,516.2 Application of Assets Net Block 1,016.5 1,202.1 1,421.3 1,665.2 Current work in process 30.1 202.8 202.8 202.8 Goodwill on consolidation 127.6 128.5 130.0 133.0 n current investment 327.3 237.5 392.2 579.9 Long term loans and advances 232.3 243.2 280.1 322.2 Other non-current assets 12.1 - - - 1,745.8 2,014.0 2,426.4 2,903.1 Current Assets Current investments 174.9 856.8 1,015.2 1,288.6 Inventories 661.5 652.8 823.7 943.8 Trade receivables 179.2 304.6 368.4 423.7 Cash & Bank 121.5 186.4 253.7 397.9 Short term loans and advances 829.1 844.3 1,008.5 1,159.7 Other current assets 373.9 306.4 347.4 399.5 2,339.9 3,151.3 3,816.8 4,613.1 Total assets 4,085.7 5,165.3 6,243.2 7,516.2
Cash Flow statement - consolidated Profit before tax 1,304.0 1,518.2 1,843.2 2,154.0 Add: Depreciation 119.3 142.1 173.0 207.1 Add: Interest cost 5.5 7.6 8.0 8.4 Others (139.5) - - - Operating profit before working 1,289.2 1,667.8 2,024.3 2,369.5 Changes in working capital (450.6) 230.0 (253.8) (159.1) Direct taxes (396.6) (514.2) (626.7) (732.4) Cash flow from operating 442.1 1,383.6 1,143.7 1,478.1 Net cash used in Investing Purchase of fixed assets (374.3) (327.7) (392.2) (451.0) Sale of fixed assets 8.0 - - - (Purchase) / Sales of FA/ Investments (Net) 359.3 (592.2) (313.1) (461.1) Incorporate deposits (Placed)/ (217.8) - - - Interest Received 74.9 - - - Others - (38.3) - - Cash flow from investing (149.9) (958.1) (705.3) (912.1) Cash flow from Financing Proceeds from issuance of shares 5.8 (0.0) - - Net proceeds from borrowings (6.8) - - - Dividend (Incl dividend tax) (288.8) (299.9) (359.9) (419.8) Interest cost (5.5) (7.6) (8.0) (8.4) Others - (48.3) - - Cash flow from Financing (295.2) (355.8) (367.9) (428.3) Net cash Inflow/Outflow (3.0) 69.7 70.5 137.7 Opening Cash & Cash Equivalents 51.0 48.0 117.7 188.3 Overdraft and others (c) (8.8) (12.2) - - Bank Balance 64.6 56.5 65.4 71.9 Closing Cash & Bank 121.5 186.4 253.7 397.9 Key Financial ratios - consolidated Per share Data EPS 73.7 83.7 101.4 118.5 Book value per share Rs 224.8 284.0 355.4 438.9 Dividend per share 24.1 25.0 30.0 35.0 Dividend Yield (%) 0.4 0.4 0.5 0.6 Payout (%) 32.7 29.9 29.6 29.5 Profitability Ratios EBITDAM(%) 13.7 15.0 16.4 16.7 EBITM (%) 12.4 13.6 14.9 15.1 NPM (%) 9.5 10.1 10.9 11.0 RoCE (%) 30.8 29.4 29.2 28.3 RoE (%) 32.8 29.5 28.5 27.0 Efficiency Data Debt-Equity Ratio 0.0 0.1 0.0 0.0 Interest Cover Ratio 212.6 179.1 206.9 230.5 Fixed Asset Ratio 10.1 9.0 8.5 8.3 Debtors (Days) 7.0 11.1 12.0 12.0 Inventory (Days) 49.9 51.0 52.0 52.0 Payable (Days) 57.1 74.0 74.0 74.0 WC (Days) -0.2-11.8-10.0-10.0 Valuation P/E 78.8 69.4 57.3 49.0 P/BV 25.9 20.5 16.4 13.2 EV/EBIDTA 54.5 46.4 37.9 32.3 EV/Sales 7.5 7.0 6.2 5.4
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