Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2017 Edition) on picking money-making stocks.

This is an entirely free service. No payments are to be made.

Download Now Subscribe to our free daily e-letter, The 5 Minute WrapUp and get this complimentary report.
We hate spam as much as you do. Check out our Privacy Policy and Terms Of Use.
Britannia: Bakery focus improves efficiencies - Views on News from Equitymaster
  • E-MAIL
  • A  A  A
  • Oct 28, 2002

    Britannia: Bakery focus improves efficiencies

    Britannia Industries has reported a 5% dip in 2QFY03 topline. However, the performance is not comparable with corresponding period last year, as during that time Britannia operated the dairy business too. This business was transferred effective March 27, 2002 to Britannia New Zealand Foods Pvt. Ltd., a joint venture with Fonterra Group, New Zealand. On a comparable basis net sales have, infact, increased by 7% YoY.

    (Rs m) 2QFY02 2QFY03 Change 1HFY02 1HFY03 Change
    Net Sales 3,796 3,607 -5.0% 7,290 6,873 -5.7%
    Other Income 41 71 73.2% 53 81 52.8%
    Expenditure 3,441 3,222 -6.4% 6,604 6,112 -7.5%
    Operating Profit (EBDIT) 355 385 8.5% 686 761 10.9%
    Operating Profit Margin (%) 9.4% 10.7%   9.4% 11.1%  
    Interest 30 26 -13.3% 66 54 -18.2%
    Depreciation 61 70 14.8% 114 133 16.7%
    Profit before Tax 305 360 18.0% 559 655 17.2%
    Tax 125 126 0.8% 206 217 5.3%
    Extraordinary items 73 28 -61.6% 62 11 -82.3%
    Profit after Tax 253 262 3.6% 415 449 8.2%
    Net profit margin (%) 6.7% 7.3%   5.7% 6.5%  
    Effective tax rate (%) 41.0% 35.0%   36.9% 33.1%  
    No. of Shares (eoy) (m) 27.9 26.7   27.9 26.7  
    Diluted earnings per share* 37.9 39.2   31.1 33.6  
    P/E ratio   13.2     15.4  
    (* annualised)            

    The company has expanded its margins to 10.7%, up from 9.4% in 2QFY02. Britannia reported a marginal 4% growth in bottomline during the quarter, largely due to a huge dip in extraordinary income. Last year during 2QFY02, the company had written back processing charges worth Rs 84 m. After adjusting for VRS expenses of Rs 11 m, Britannia showed Rs 73 m as net extraordinary income in 2QFY02. In comparision, the company recorded Rs 28 m as extraordinary income in September quarter this year (Rs 47 m as profit on sale of residential properties minus Rs 19 m VRS expenses). Excluding extraordinary income in both the corresponding quarters, Britannia reported a healthy 30% growth in net profit during September quarter 2002.

    Cost break-up
    (Rs m) 2QFY02 2QFY03 Change 1HFY02 1HFY03 Change
    Material cost 1,443 1,538 6.6% 2,541 2,582 1.6%
    Staff cost 242 238 -1.7% 437 634 45.1%
    Purchase of finished goods 606 423 -30.2% 1,176 1,674 42.3%
    Other expenditure 1,150 1,023 -11.0% 2,450 1,222 -50.1%
    Total expenditure 3,441 3,222 -6.4% 6,604 6,112 -7.5%

    The jump in other income (up 73% YoY) seems a result of increased investments due to freeing of Britannia's resources post the dairy hive off. The higher other income has largely aided the bottomline growth. Going forward this trend is likely to continue.

    The primary business of the company is now bakery, which consists of biscuits, bread and cakes. A 7% topline growth in this business is a good sign in these difficult market conditions. With Britannia's focus back on bakery, one can expect further efficiencies going forward. At the current price of Rs 519 the stock trades at 15.4x annualised 1HFY03 earnings (including extraordinary income), market cap to sales of 1x.



    Equitymaster requests your view! Post a comment on "Britannia: Bakery focus improves efficiencies". Click here!


    More Views on News

    GSK Consumer: On the Recovery Path (Quarterly Results Update - Detailed)

    Jun 20, 2017

    While GSK consumer reported muted revenue growth, volumes are seen to be recovering.

    Apex frozen food Ltd. (IPO)

    Aug 21, 2017

    Should you subscribe to the IPO of Apex Frozen Foods Ltd?

    Britannia: Margin Expansion Trend Continues (Quarterly Results Update - Detailed)

    Mar 11, 2016

    Britannia declared results for the quarter ended December 2015. The company's revenues were up by 10% YoY, while profits came in higher by 51% YoY.

    Britannia: Strong momentum continues... (Quarterly Results Update - Detailed)

    Nov 25, 2015

    Britannia declared results for the quarter ended September 2015 recently. While revenues were up by 12% YoY for the quarter, profits came in lower by 20% YoY.

    A Little Gem in the FMCG Sector (Sector Info)

    Jul 18, 2016

    Will investing in Bajaj Corp yield high returns on account of a rural revival in sight?

    More Views on News

    Most Popular

    This Small Cap Can Drive Chinese Players Out of India (and Make a Fortune in the Process)(The 5 Minute Wrapup)

    Aug 17, 2017

    A small-cap Indian company with high-return potential and blue-chip-like stability is set to supplant the Chinese players in this niche segment.

    The Most Important Innovation in Finance Since Gold Coins(Vivek Kaul's Diary)

    Aug 10, 2017

    Bill connects the dots...between money and growth, real money and real resources, gold and cryptocurrencies...and between gold, cryptocurrencies, and time.

    It's the Best Time to Buy IT Stocks(Daily Profit Hunter)

    Aug 16, 2017

    The IT Sector could be in an uptrend till February 2019. Are you prepared to ride the trend?

    Bitcoin Continues Stellar Rise(Chart Of The Day)

    Aug 10, 2017

    Bitcoin hits an all-time high, is there more upside left?

    5 Steps To Become Financially Independent(Outside View)

    Aug 16, 2017

    Ensure your financial Independence, and pledge to start the journey towards financial freedom today!

    Copyright © Equitymaster Agora Research Private Limited. All rights reserved.
    Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement.

    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: info@equitymaster.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407

    Become A Smarter Investor In
    Just 5 Minutes

    Multibagger Stocks Guide 2017
    Get our special report, Multibagger Stocks Guide (2017 Edition) Now!
    We will never sell or rent your email id.
    Please read our Terms


    Aug 23, 2017 (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


    Detailed Quarterly Results With Charts