Stocks to buy: Kotak Sec recommends Britannia Ind, Smartworks Coworking
Stocks to buy, February 24: Kotak Securities Equity Research Head suggests placing bets on Britannia Industries and Smartworks Coworking Spaces. Here's why
 "Stocks to buy: Kotak Sec recommends Britannia Ind, Smartworks Coworking")
Stocks to buy recommended by Shrikant Chouhan, Kotak Securities:
Britannia Industries – Add
CMP – ₹6,088
FV – ₹6,475
Resistance – ₹6,265–₹6,475
Support – ₹6,000–₹5,900
Britannia Industries posted consolidated net revenue growth of 9.5 per cent Y-o-Y in Q3FY26 (est. 12.5 per cent, Q2FY26 4 per cent). GST-led trade disruptions weighed on performance in October. However, demand normalised thereafter, with the company reporting 12 per cent sales growth in November–December, supported by healthy volume growth. The growth was driven by momentum across both biscuits and adjacent categories. Gross Margin expanded sharply by 450 basis points Y-o-Y and 160 bps Q-o-Q to 43.3 per cent (beat), driven by relatively stable commodity prices. The wheat crop season will start from March, and the company expects overall commodity inflation to be benign. The Earnings before interest, taxes, depreciation, and amortisation (Ebitda) margin expanded 230 bps Y-o-Y and 100 bps qoq to 20.7 per cent (beat). We model Ebitda margin of 20 per cent for financial years 2027 and 2028 (FY27 and FY28).
With 60–65 per cent of its portfolio in low-unit packs (LUPs), Britannia Industries is well-placed to benefit from the GST rate revision. The company remains focused on strengthening distribution and brand equity to counter competition. We expect the earnings growth trend to improve going forward, given: 1) improving macro drivers for consumption, 2) continued focus on distribution expansion, 3) product innovation serving as a key impetus, 4) continued investment in the brands, as well as the appointment of a new CMO , and 5) stable key raw material prices.
A few pan-India players have not transitioned to the revised LUP packs under the new GST slabs, which has led to dual price points (₹4.5/₹5 and ₹9/₹10) in the trade, a situation likely to reset in the near term. Meanwhile, Britannia Industries is focused on strengthening distribution and brand equity. Currently, the company’s salience in e-commerce and quick commerce stands in high single digits, and the company expects this to increase to the teens by FY27. Going forward, Britannia Industries plans to launch more digital-first brands, which are also expected to be margin accretive. The Cake, Rusk, Croissant, and Wafers categories grew double-digit during the quarter. Management stated that the contribution from the E-Comm channel to these businesses is 3 times higher than that of biscuits. The new CEO will aim to focus on strengthening the Britannia brand (the company has also hired a new CMO) and building the functional foods category (similar to NutriChoice).
We model a 12 per cent profit after tax (PAT) compound annual growth rate (CAGR) for FY26-28E. We reiterate our ADD rating on Britannia Industries with a target price of ₹6,475, valuing Britannia Industries at 47 times FY28E.
Smartworks Coworking Spaces – Buy
CMP – ₹438
FV – ₹620
Resistance – ₹455–₹470
Support – ₹420–₹405
Smartworks Coworking Spaces commenced operations in 2016 as a co-working space provider and has scaled rapidly as one of India’s largest flexible workspace operators. As of December 2025, Smartworks Coworking Spaces had a total footprint of 1.53 crore square feet, up from 1.27 crore square feet in September 2025. This includes 92 lakh square feet of fully operational area, 19 lakh square feet under fit-out or handover, and another 42 lakh square feet secured through letters of intent (LOI).
The company operates 55 centres across 15 major Indian cities, with a leased seating capacity stood at approximately 254,000 seats as of December 2025. Smartworks Coworking Spaces’ business model is increasingly oriented toward mid-to-large enterprises, and it has built a diversified and expanding client base comprising Indian corporates, multinational companies operating in India, as well as start-ups. Its campuses are designed to offer a high-quality, enterprise-grade experience, supported by a proprietary design library, integrated technology platforms and a wide range of amenities. Importantly, demand is well diversified across industries, which limits client concentration risk.
The broader Indian commercial real estate market remains in a strong upcycle, reflected in robust leasing activity and declining vacancy levels across most key cities. Demand is being led by global capability centres (GCCs), alongside structural shifts such as hybrid work models, a growing preference for flexible lease structures and evolving workplace cultures. As a result, flexible workspace stock in tier-1 cities has expanded from 3.5 crore square feet in 2020 to 10 crore square feet by March 2025, and is expected to reach around 14 crore square feet over the next two years. The flexible workspace model delivers healthy returns on invested capital, primarily driven by investments in fit-outs and interiors. Industry RoIC for flexible office operators typically ranges between 15–20 per cent, excluding the benefit of security deposits.
Operational performance has been strong, with Smartworks Coworking Spaces reporting an 86 per cent Y-o-Y increase in adjusted Ebitda to ₹84.7 crore in Q3FY26, while margins expanded by 500 basis points to 18%. During Q3FY26, the company signed LOIs for 17 lakh square feet, taking its total footprint to 1.53 crore square feet. With committed rental revenue of ₹4,700 crore, equivalent to 2.7 times FY26E revenue, Smartworks Coworking Spaces has strong visibility through FY27.
We expect the growth momentum to sustain, with 24 per cent CAGR in adjusted Ebitda over financial years 2026-2028 (FY26-28), aided by an increase in the operational area to 1.45 crore square feet by FY28E, from 92 lakh square feet currently, and blended occupancy of 83.5 per cent. At 13 times FY27E EV/adjusted Ebitda, valuations remain attractive given the company’s growth and return profile. We have a Buy recommendation with a DCF based fair value of ₹620.
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Disclaimer: Shrikant Chouhan is the head of equity research at Kotak Securities. Views expressed are his own.