X

Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2018 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: Robust profitable growth - Views on News from Equitymaster

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

  •
  • MyStocks
MEMBER'S LOGIN

MEMBER'S LOGINX

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

Britannia: Robust profitable growth

Nov 24, 2014

Britannia Industries Limited declared its results for the second quarter of financial year 2014-15 (2QFY15). The company has reported 12.4% YoY growth in sales and a 13.2% YoY growth in net profits. Here is our analysis of the results.

Performance summary
  • Britannia recorded a 12.5% YoY topline growth in 2QFY15. For 1HFY15, the revenues were up by 13.7% YoY.
  • The operating profit margin expanded by 2% YoY backed by lower ad-spends and conversion costs. The operating margin for 1HFY15 improved by 1.3% YoY.
  • Excluding exceptional income from sale of land and building, net profits grew by 50% YoY and 39% YoY in 2QFY15 and 1HFY15, respectively.

Financial performance snapshot
(Rs m) 2QFY14 2QFY15 % change 1HFY14 1HFY15 % change
Total income 17,558 19,745 12.5% 33073 37615 13.7%
Expenditure 15,949 17,544 10.0% 30084 33717 12.1%
Operating profit (EBITDA) 1,609 2,201 36.8% 2989 3898 30.4%
EBITDA margin (%) 9.2% 11.1% 2.0% 9.0% 10.4% 1.3%
Other income 41 184 350.4% 180 399 121.5%
Interest 10 11 4.8% 53 21 -60.8%
Depreciation 211 308 46.2% 406 626 54.0%
Profit before tax 1,429 2,067 44.7% 2,710 3,651 34.7%
Exceptional items - 1,599   - 1,599  
Tax 451 964 113.6% 837.2 1411.2 68.6%
Profit after tax/(loss) 977 1,462 49.6% 1,873 2,599 38.8%
Share of profit/(loss) of associates (1) (1)   (2) (1)  
Minority interest - 4   0 4  
Net profit/ (loss) 976 2,705 177.0% 1,872 3,841 105.2%
Net profit margin (%) 5.6% 13.7% 8.1% 5.7% 10.2% 4.6%
No. of shares (m)         120  
Diluted earnings per share (Rs)*         49.4  
Price to earnings ratio (x)*         33.9  
* On a 12-month trailing basis

What has driven growth in 2QFY15?
  • Britannia posted a 12.5% YoY rise in revenues led with two-thirds of its growth coming from volumes.

    Cost break-up
    As a % of net sales 2QFY14 2QFY15 Change in basis points
    Total cost of goods 59.9% 60.3% 48.4
    Employee costs 3.8% 3.4% -34.8
    Conversion and other charges 6.9% 6.5% -38.8
    Advertisement costs 8.8% 7.3% -156.6
    Other expenditure 11.5% 11.3% -16.8

  • Backed by a 7% cut in ad-spends and a 0.4% fall in conversion charges to sales ratio on increased in-house manufacturing, the operating margin expanded by 2% YoY during the quarter. The raw material cost to sales ratio was up by 0.5% YoY, however employee costs as a proportion of sales fell by 0.3% during the quarter.

  • Excluding the one-time profit of Rs 1.24 bn on sale of land and building, the net profit was up by 50% YoY for the quarter. The depreciation charges surged by 46% YoY during the quarter. The tax incidence shot up to 46.6% from 31.6% in the year-ago quarter. However, the company witnessed a steep 350% jump in other income earned during the quarter.
What to expect?
Britannia continues to reap the benefits of a revamped biscuit portfolio with more healthy offerings and increased focus on the cookie segment that is growing at a faster pace. The company recently launched Tiger Butter Krunch and Nutrichoice Heavens cookies in the mass and premium end of the cookie market. Therefore the company has been witnessing better volume growth at a time when the other packaged food companies are struggling to grow offtake. Even its efforts at cost optimisation through increased in-house manufacturing have enabled it to expand margins.

At the price of Rs. 1674, the stock is trading at 30 times our estimated FY17 earnings. At current valuations, the stock is overvalued and therefore we re-iterate a SELL on the stock.

To Read the Full Story, Subscribe or Sign In
To Read the Full Story, Subscribe or Sign In


Small Investments
BIG Returns

Zero To Millions Guide 2019
Get our special report, Zero To Millions
(2019 Edition) Now!
We will never sell or rent your email id.
Please read our Terms

BRITANNIA SHARE PRICE


Dec 18, 2018 (Close)

TRACK BRITANNIA

  • 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

MORE ON BRITANNIA

BRITANNIA - TATA COFFEE COMPARISON

Compare Company With Charts

COMPARE BRITANNIA WITH

OTHER USEFUL LINKS

MARKET STATS


ABOUT EQUITYMASTER

Since 1996, Equitymaster has been the source for honest and credible opinions on investing in India. With solid research and in-depth analysis Equitymaster is dedicated towards making its readers- smarter, more confident and richer every day. Here's why hundreds of thousands of readers spread across more than 70 countries Trust Equitymaster.

FREE NEWSLETTERS
PREMIUM PRODUCTS
QUICK LINKS
APPS
  • Get Equitymaster Android App on Google Play
  • Get Equitymaster iOS App on App Store
FOLLOW

Copyright © Equitymaster Agora Research Private Limited.

Whitelist | Refer | Terms | Privacy | Contact | About | Sitemap

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

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, Canada or the European Union countries, 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.