Britannia Industries has reported just over 3% growth in 1QFY04 topline. The company has however finished the June quarter with a significant 53% net profit growth.
Operating Profit (EBDIT)
Operating Profit Margin (%)
Profit before Tax
Extraordinary items (VRS)
Profit after Tax
Net profit margin (%)
Effective tax rate (%)
No. of Shares (eoy) (m)
Diluted earnings per share*
The significant rise in bottomline is largely led by a huge 760% growth in other income. This significant rise in other income has arisen out of profit on sale of investment as well as an excise duty refund. The company has not given out the break-up of this extraordinary income. If we exclude the other income component from the numbers, then profit before tax is up nearly 24% YoY
Purchase of finished goods
An expansion in the operating margins has also aided the strength in performance. The company's staff cost has gone down by 47% during the quarter. The company's move to hive off its dairy business in 2002, as well as a VRS scheme seem to be the key reason for this fall in staff cost. Britannia's purchase of finished goods is also down 20% in the June quarter. However, the company's raw material costs are up a significant 43%, thus negating the gains from pruning of purchase of finished goods. Net, net, operating expenses grew by only 1.5%, vis-ŕ-vis sales growth of over 3% during the quarter.
The primary business of the company is now bakery, which consists of biscuits, bread and cakes. At the current price of Rs 553 the stock trades at 12.1x annualised 1QFY04 earnings, market cap to sales of 1x. However, the valuations are skewed owing to the other income fillip. Moreover, the recent controversy on the exit of the company's ex-MD (Mr. Sunil Alagh), has also raised promoter related concerns.
LEGAL DISCLAIMER: Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA or Canada, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here. The performance data quoted represents past performance and does not guarantee future results.
SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.
Equitymaster Agora Research Private Limited. 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India. Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: firstname.lastname@example.org. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407