• JULY 25, 2000

Milkman drives Britannia's 1Q profit growth

Higher bakery and dairy product sales powered Britannia's topline which has increased by 16% YoY to Rs 3.3 bn in 1QFY01. The company has a large presence in the biscuits market and revenues from biscuits contributes nearly 70% to its total turnover. In the current quarter biscuits volumes are up by 15% led by its recently launched products Vita MarieGold and Nutrichoice Good Morning.

While favourable raw material prices helped the company to improve its profit margins to 7.9% (from 7% in 1QFY00), increase in other expenses by 20% slowed down the margin growth. Duty to hike in excise duty rate of biscuits and cakes from 8% to 16% operating margins witnessed slower growth rate.

(Rs m) 1QFY00 1QFY01 Change
Sales 2,866 3,320 15.8%
Other Income 22 13 -40.9%
Expenditure 2,666 3,057 14.7%
Operating Profit (EBDIT) 200 263 31.5%
Operating Profit Margin (%) 7.0% 7.9%  
Interest 19 19 0.0%
Depreciation 41 46 12.2%
Profit before Tax 162 211 30.2%
Other Adjustments 3 7  
Tax 53 69 30.2%
Profit after Tax/(Loss) 106 135 27.4%
Net profit margin (%) 3.7% 4.1%  
No. of Shares (eoy) (m) 18.6 27.9  
Diluted number of shares 27.9 27.9  
Diluted Earnings per share* 15.2 19.4  
*(annualised) 109 142  

Apart from being a leader in biscuits market, Britannia has slowly expanded its reach in dairy business with the launch of flavoured milk, butter and ghee under the 'Milk Man' umbrella. The company plans to double the turnover from the dairy business in next three years, which presently contributes around 20% to its total turnover. In this business it faces the strong competition from Amul and Nestle.

Britannia quotes at a P/E multiple of 33 times its 1QFY01 annualised earnings at the current market price of Rs 639. The company's market cap to sales ratio is among the lowest in the FMCG industry.

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 (Research Analyst) bearing Registration No. INH000000537 (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.

Equitymaster Agora Research Private Limited (Research Analyst)
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