Britannia Ind hits new high, surges 50% in H1FY14

Since April 1, the stock has rallied 50% as compared to 6% rise in BSE Sensex and 17% gain in FMCG index.

Britannia Industries is trading higher by nearly 4% at Rs 784 also it’s a record high on BSE on hopes of sustainable growth in coming quarters.

Shares of fast moving consumer goods (FMCG) company has outperformed the market by surging 50% in first half (April-September) of the current financial year 2013-14 (FY14) from Rs 525 on March 28, as compared to 6% rise in benchmark index S&P BSE Sensex.  The FMCG index has gained nearly 17% during the same period.

In first quarter of FY14, the company delivered a consolidated revenue growth of 14% and net profit growth of 92.6% with a profit of Rs 89.5 crore over the previous year. The consolidated operating margin had increased to 7.7% from 4.7% for the same quarter of last year.

Nusil N Wadia, the company’s chairman while addressing annual general meeting said that the company has an opportunity to improve its performance, and part of this would come from stable prices of inputs and part from operational improvements like increasing reach and distribution, innovation and prudent cost management all round.

Meanwhile, brokerage house Prabhudas Lilladher is bullish on Britannia Industries and has recommended 'Buy' rating on the stock with a price target of Rs 885 in its research report dated August 31, 2013.

Declining share of Glucose (around 15% of sales) and rising proportion of niche segments like cakes, bread and rusk is improving the margin profile. Input costs of sugar, wheat and palm oil remain favorable in the coming quarters as well, says analyst in a note.

The company has also started benefiting from higher inhouse production post commissioning of three units in the past 18 months and conversion cost has declined by 90bps to 8.2%, which should sustain in the coming quarters as well, added report.