Britannia Q4 Results Review - Metamorphosis Into A ‘Total Food’ Company: HDFC Securities

HDFC Securities Institutional Equities

We upgrade Britannia Industries Ltd. to Add from Reduce with a target price of Rs 5,500 (50 times FY26 earnings per share, 10% premium to its three-year average price-to-earning multiple) and recommend investors with a long-term bias to accumulate the stock on every dip, given a solid historical track record (revenue/Ebitda and profit after tax compound annual growth rate of 9/18/18% respectively over the last decade).

We expect Britannia to see revenue/Ebitda and PAT CAGR of 7/11/11% over FY23-26, which is somewhat similar to Nestle.

In the near term, the stock might remain sideways from current levels as there is no near-term trigger on the volume front and further upside from current levels will be contingent upon whether management can walk the talk on its guided double-digit volume growth.

The icing on the cake will be if it can hold its margins while making required investments in brand building and distribution infrastructure. Levers for multiple rerating–

1. showcasing execution capabilities that it can scale up any other category apart from biscuits;

2. sustaining mid-single-digit volume in the core biscuits segment along with improvement in profitability and market share gains.

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