Britannia – ‘am to pm’ brand - Views on News from Equitymaster

Helping You Build Wealth With Honest Research
Since 1996. Try Now

  • MyStocks


Login Failure
(Please do not use this option on a public machine)
  Sign Up | Forgot Password?  

Britannia – ‘am to pm’ brand

Aug 30, 2000

Britannia Industries Ltd. (BIL) has transformed itself from a mere biscuit making company to a diversified company focussing on high margin businesses like dairy products. The company has also maintained its leadership in its core business (biscuits) through aggressive new launches and re-launches.Recently BIL has taken a lot of initiative to cope up with increasing competition in its reasonably new dairy and bakery business. The company plans to increase the turnover from dairy division to 20% from 10% of its business currently. In this segment it will hit the market with its ready to drink ‘lassi’ by the end of the current month. It has also plans to launch instant coffee and new flavours in the flavoured milk range under its recently floated ‘Milkman’ brand. Further it has plans to enter the bakery segment with the launch of brown bread. Increasing contribution from this high margin business is expected to contribute positively to BIL’s bottomline.

BIL is adopting the right strategy with the biscuit market witnessing stagnant growth rates in value terms. Further the increase in the excise duty has added in slowing the growth rate. As a result any attractive rate of growth is restricted to the low-priced segment.

The company has planned to position the ‘Britannia’ brand as ‘am to pm’ brand. It has the vision of making every third Indian a Britannia consumer. Its recently launched new biscuits like VitaMariGold, Tiger variants, Nutrichoice Junior and Good Morning to confirm this. The brands are doing well as they provide options for different consumption occasions to consumers. The initiatives undertaken by the company will help it to achieve its ambitious aim.

Nevertheless its profit margins are lowest in the industry, which is likely to increase with the higher contribution from dairy business. The company’s cost cutting measures and sustained advertisement to sales ratio is expected to expand its margin in future.

Comparative performance
OPM(excl. other income)21.5%12.0%7.5%18.4%14.6%15.2%
NPM 13.7%10.2%4.5%13.2%7.1%6.9%
Advt. as a % to sales7.8%7.1%6.6%5.4%10.2%6.5%

At the current market price of Rs 683, BIL is trading at a P/E ratio of 35 times its first quarter annualised earnings and 26 times its FY01 projected earnings. The company has been consistently increasing its returns in the past three years. The valuations of the company are expected to improve with the increase in margins. Also, the steps taken by the management to ensure topline growth through low cost quality products is likely to stand the company in good stead.

Increasing returns
RONW 23.9%26.5%29.3%
ROA 7.4%8.7%10.0%
ROIC 15.4%17.3%20.5%

Equitymaster requests your view! Post a comment on "Britannia – ‘am to pm’ brand". Click here!


More Views on News

BRITANNIA 2020-21 Annual Report Analysis (Annual Result Update)

Nov 15, 2021 | Updated on Nov 15, 2021

Here's an analysis of the annual report of BRITANNIA for 2020-21. It includes a full income statement, balance sheet and cash flow analysis of BRITANNIA. Also includes updates on the valuation of BRITANNIA.

Why Investors Should Not Worry About the 29% Fall in Britannia's Bottomline (Views On News)

Aug 2, 2021

Britannia's June quarter earnings missed estimates due to higher costs.

BRITANNIA Announces Quarterly Results (4QFY21); Net Profit Down 3.4% (Quarterly Result Update)

Jul 9, 2021 | Updated on Jul 9, 2021

For the quarter ended March 2021, BRITANNIA has posted a net profit of Rs 4 bn (down 3.4% YoY). Sales on the other hand came in at Rs 31 bn (up 9.2% YoY). Read on for a complete analysis of BRITANNIA's quarterly results.

This Multibagger Stock Zooms 20% After Dolly Khanna Buys Stake (Views On News)

Nov 24, 2021

Shares of this edible oil company zoomed over 50% in three days after ace investor bought around 1% stake.

What Led to the Massive Surge in the Stock of Jubilant FoodWorks? (Views On News)

Aug 18, 2021

Jubilant FoodWorks hits new high, surges 35% in a month on growth prospects.

More Views on News

Most Popular

Infosys vs TCS: Which is Better? (Views On News)

Nov 26, 2021

In the post pandemic era, the top two IT companies in India are fighting to capture the growing demand for IT.

This Multibagger Stock Zooms 20% After Dolly Khanna Buys Stake (Views On News)

Nov 24, 2021

Shares of this edible oil company zoomed over 50% in three days after ace investor bought around 1% stake.

6 Popular Stocks that Turned into Penny Stocks (Views On News)

Nov 27, 2021

A look at popular stocks that crashed big time and never recovered, i.e. which went from 'Multibaggers to Multibeggers'.

India's Top 5 Monopoly Stocks to Watch Out for (Views On News)

Nov 30, 2021

These 5 companies dominate their sectors with a huge piece of the pie.

5 Indian Companies Embracing Blockchain Technology (Views On News)

Nov 23, 2021

Blockchain adoption in India was slow in the past. Now, the technology is being well received.


Become A Smarter Investor
In Just 5 Minutes

Multibagger Stock Guide 2022
Get our special report Multibagger Stocks Guide (2022 Edition) Now!
We will never sell or rent your email id.
Please read our Terms


Dec 6, 2021 (Close)


  • Track your investment in BRITANNIA with Equitymaster's Portfolio Tracker. Set live price alerts, get research alerts and more. Get access now...
  • Add To MyStocks