Britannia Industries hits new high; stock surges 70% in one year

Since May 14, the stock gained 13% after the company reported a healthy 25% year on year jumped in its consolidated net profit and 13% growth in revenue in March quarter.

Shares of Britannia Industries were trading higher for the fifth straight day, hitting a new high of Rs 6,189 per share, up 1.5% on the BSE in intra-day trade on Friday.

Stock of the leading food company was up 4% as compared to 1.2% decline in the S&P BSE Sensex during the week. In past one year, Britannia Industries has rallied 70% from Rs 3,638 against 14% rise in the benchmark index.

Since May 14, in past one and half months, the stock gained 13% after the company reported a healthy 25% year on year jumped in its consolidated net profit and 13% growth in revenue in March quarter. On comparison, the Sensex was down nearly 1% during the same period.

During the quarter revenue growth was backed by the positive momentum in the market. Premiumization and increase in distribution footprints have resulted in better realization, improved profitability and robust volume growth especially in the rural India.

“Britannia has posted consistently better results on QoQ as well as YoY basis. We believe that with a management focus on growing its portfolio with new innovative products in the premium segment, capturing new markets and geography, increasing reach in the distribution channel, focus to increase penetration in rural areas, untapped opportunities in the domestic and international market, etc. will help it to grow faster in the market,” said analysts at KRChoksey Shares and Securities. The brokerage firm recommends ‘accumulate’ rating on the stock with 12 month target price of Rs 6,576.

CRISIL believes that Britannia may report compounded annual revenue growth of 8-10% and operating profitability to remain at about 14% over the medium term. Financial risk profile is expected to remain robust, driven by strong liquidity and debt protection metrics.

The rating agency believes Britannia will continue to maintain healthy market position in the biscuit industry, backed by strong brands and an established distribution network. Also, cash accrual will be more than sufficient to meet capex, ensuring steady robust financial risk profile.

Britannia is one of the leading players in the Indian biscuit industry, with market share of about 33% (in value terms). Product portfolio is diversified across all seven biscuit categories: glucose, Marie, cookies, crackers, cream, milk, and health. Also, its brands (Good Day, Tiger, Marie, Nutrichoice, and Milk Bikis) have strong recall.

At 11:50 am; Britannia Industries was trading 0.69% higher at Rs 6,139, as compared to 0.81% rise in the Sensex. A combined 49,897 equity shares changed hands on the counter on the BSE and NSE so far.