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Britannia's profits boosted by growth in dairy products - Views on News from Equitymaster
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  • May 31, 2000

    Britannia's profits boosted by growth in dairy products

    Britannia Industries Ltd (BIL) has registered a 14% growth in its revenue to Rs 11.7 bn in FY00 compared to previous period backed by higher sales in bakery and dairy products. New launches in the biscuit segment such as Good Morning biscuits under the Nutrichoice umbrella, realunch of Marie Gold under the VitaMarie Gold umbrella and Tiger variants in the medium and mass segments helped to increase sales volume by 15%.

    (Rs m) FY99 FY00 Change
    Sales 10,301 11,698 13.6%
    Other Income 131 159 21.4%
    Expenditure 9,631 10,822 12.4%
    Operating Profit (EBDIT) 670 876 30.7%
    Operating Profit Margin (%) 6.5% 7.5%  
    Interest 66 73 10.6%
    Depreciation 159 172 8.2%
    Profit before Tax 576 790 37.2%
    Other Adjustments - 19  
    Tax 180 261 45.0%
    Profit after Tax/(Loss) 396 510 28.8%
    Net profit margin (%) 3.8% 4.4%  
    Earnings per share 21.33 18.31  

    BIL's net profit jumped up by 34% if one were to exclude the VRS cost of Rs 19 m. Its operating profit margins increased by 1% to 7.5% due to cost control measures initiated during the year. The company has incurred capital expenditure of Rs 120 m to upgrade its manufacturing facilities, focusing on new products and modern packing systems.

    During the year BIL entered the ghee market and introduced Milkman as an umbrella brand for its dairy products range. The company has recently consolidated its dairy business and currently enjoys a share of 35% in the cheese market. In its dairy products business, BIL however faces stiff competition from Amul.

    For the future, BIL has put in place an aggressive strategy to become either a number one or number two player in the youth snacks category. It is constantly working on redefining and repositioning its products, identifying health as a critical link with the Indian consumer.

    At the current market price of Rs 588, BIL trades at a PER of 32 times its FY00 earnings on a market cap to sales ratio of 1.4 times. Recently the company has declared, bonus in the ratio of 1:2 which has helped to boost the valuation of the stock. In the past the company has enjoyed PER in the range of 45-60 times.



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