Initiating coverage | FMCG
April 18, 2011
BUY
Britannia Industries
CMP
`377
Tiger Zor
Target Price
`458
Investment Period
12 months
Britannia Industries (Britannia) is a dominant player in the Indian biscuits market
with ~35% market share. The company has a balanced portfolio with seven super
Stock Info
brands namely Tiger, Milk Bikis, Good Day, Treat, Marie Gold, 50-50 and
Sector
FMCG
NutriChoice. The stock currently trades at 0.8x its FY2013 EV/sales, which is at
Market Cap (` cr)
4,506
~27% discount to its five-year average EV/Sales of ~1.1x and hence, is attractive.
We Initiate Coverage on the stock with a Buy recommendation and a target price
Beta
0.3
of `458, based on 22x P/E FY2013E EPS (1x EV/Sales).
52 Week High / Low
535/322
Avg. Daily Volume
19,793
Revenue of Britannia on strong wicket, driven by higher volumes: We expect
Face Value (`)
2.0
Britannia to register a ~14% CAGR in its top line, aided by high volumes and
BSE Sensex
19,091
improving sales mix (Britannia has recently introduced premium products in the
Nifty
5,729
health and wellness space). The company has made significant efforts to provide
Reuters Code
BRIT.BO
premium biscuits under its brands Tiger and Treat at lower price points (`5 for a
Bloomberg Code
BRIT@IN
three-piece pack of cream biscuits). We believe this move will give consumers a
choice to up trade from plain glucose variants as well as maintain affordability of
biscuits for mass consumption. Hence, we expect volume growth for Britannia to
Shareholding Pattern (%)
be in line with the industry at ~6% over FY2011-13E, driven by low-price, value-
Promoters
51.0
added products.
MF / Banks / Indian Fls
20.0
Margins to improve on the back of cooling raw-material prices: Over the past one
FII / NRIs / OCBs
10.3
year, raw-material prices have been trending high, putting significant margin
Indian Public / Others
18.7
pressure on Britannia. However, prices of major commodities such as sugar and
wheat have shown some signs of cooling in the past one month. While we have
limited visibility on raw-material prices over the longer term, with the onset of
Abs. (%)
3m 1yr
3yr
normal monsoons, we do not expect a significant rise in the prices of these
Sensex
0.0
8.5
14.0
commodities going ahead. Moreover, we believe Britannia’s various cost-
Britannia
5.7
14.4
45.5
rationalisation methods and improving sales mix will aid operating margins from
the current level of ~5% to 5.6% in FY2012E and 7% in FY2013E.
Key financials
Y/E March (` cr)
FY2010 FY2011E FY2012E
FY2013E
Net sale
3,425
4,150
4,763
5,415
% chg
9.0
21.2
14.8
13.7
Net profit
116.5
124.9
170.7
248.3
% chg
(35.4)
7.2
36.6
45.5
EBITDA (%)
4.8
4.6
5.6
7.0
EPS (`)
9.8
10.5
14.3
20.8
P/E (x)
38.7
36.1
26.4
18.1
Chitrangda Kapur
022-39357800 Extn: 6822
P/BV (x)
11.4
10.0
8.9
7.4
RoE (%)
27.7
29.6
35.7
44.5
RoCE (%)
15.0
17.1
23.9
41.6
Sreekanth P.V.S
EV/Sales (x)
1.3
1.1
0.9
0.8
022-39357800 Extn: 6841
EV/EBITDA (x)
26.7
23.3
16.6
11.6
Source: Company, Angel Research
Please refer to important disclosures at the end of this report
1
Britannia Industries | Initiating Coverage
Initiate Coverage with Buy and a target price of `458
We estimate operating margins to improve to 7% in FY2013E
We have factored in CAGR of 14.2%, 41.2%, and 41% in top line, EBITDA and
earnings, respectively, for Britannia over FY2011-13E. The company has issued
8.25% coupon rate redeemable, non-convertible bonus debentures of face value
`170 each, which will be redeemed in full on March 22, 2013. We do not expect
the company to take any further debt and, hence, have factored in the same in our
numbers. We expect Britannia’s cash balance to dwindle to ~`14cr in FY2013 as
the company sells part of its investments to repay the bonus debentures in full at
the end of FY2013.
Exhibit 1: Consensus vs. Angel estimates
(` cr)
FY2012E
FY2013E
Top line
Angel
4,763
5,415
Consensus
4,983
5,840
Diff (%)
(4.4)
(7.3)
Net profit
Angel
171
248
Consensus
216
277
Diff (%)
(20.8)
(10.5)
Source: Bloomberg, Angel Research
TP based on 22x P/E FY2013E EPS, 12% discount to 5-year avg.
We Initiate Coverage on Britannia with a Buy recommendation and a target price
of `458, based on 22x FY2013E EPS of `20.8 (1x EV/sales). Britannia trades at
64% premium to Sensex (which is lower as compared to average three-year
premium to Sensex of 82%), and in-line to its average five-year P/E of ~25x.
Moreover, the stock is available at 0.8x FY2013E EV/sales, which is at ~27%
discount to its five-year average EV/Sales of ~1.1x and, hence, is attractive. We
value the stock at ~12% discount to its five-year average P/E to build a margin of
safety from raw-material price pressures and arrive at a target price of `458,
resulting in an upside of 21% from the current level.
April 18, 2011
2
Britannia Industries | Initiating Coverage
Exhibit 2: Trading at attractive 0.8x FY2013E EV/sales
Exhibit 3: FY2012E P/E in line with its 5 yr avg. P/E
45.0
8,000
40.0
7,000
35.0
6,000
30.0
5,000
25.0
4,000
20.0
15.0
3,000
10.0
2,000
5.0
1,000
-
-
Apr-05
Apr-06
Apr-07
Apr-08
Apr-09
Apr-10
Apr-11
EV
1.5x
1.25x
1x
0.75x
0.5x
Source: Company, Angel Research
Source: Company, Angel Research; Note: Blue line denotes its 5-yr avg. P/E
Exhibit 4: One-year forward P/E band
Exhibit 5: Britannia’s one-year return to the Sensex
600
180%
Sensex
Britannia
500
160%
400
140%
300
200
120%
100
100%
-
80%
Series1
16x
20x
24x
28x
Source: Company, Angel Research
Source: Company, Angel Research
Exhibit 6: Relative Valuation
Company Reco
M.cap CMP
TP
Upside
P/E (x)
EV/Sales (x)
RoE (%)
#CAGR
(` cr)
(`)
(`)
(%)
FY12E FY13E FY12E FY13E FY12E FY13E Sale
EPS
Asian Paints Accumulate
24,710
2,576
2,767
7.4
24.6
20.5
2.7
2.2
39.9
37.6
17.1
19.7
Britannia
Buy
4,506
377
458
21.4
26.4
18.1
0.9
0.8
35.7
44.5
14.2
41.0
Colgate
Reduce
11,991
882
837
(5.1)
26.0
23.2
4.5
4.0
100.1
87.2
13.5
11.8
Dabur
Buy
17,952
103
123
19.2
23.0
20.1
3.3
2.8
53.1
46.4
23.2
24.8
GSKCHL
Reduce
9,552
2,271
2,144
(5.6)
27.4
23.3
3.1
2.6
32.6
31.5
17.4
17.0
GCPL
Buy
11,824
365
431
17.9
21.3
18.7
3.1
2.8
35.1
26.2
15.2
23.0
HUL
Accumulate
61,153
280
304
8.5
24.7
21.2
2.6
2.3
75.9
77.9
13.2
16.1
ITC
Accumulate
146,986
190
205
8.1
25.1
22.2
5.7
5.0
31.9
30.6
13.5
14.2
Marico
Neutral
8,386
137
145
5.9
28.1
21.7
2.6
2.2
35.9
29.6
11.9
26.0
Nestle
Reduce
35,963
3,730
3,490
(6.4)
36.8
31.0
4.9
4.2
107.1
107.4
16.0
20.4
Source: Angel Research; Note: # CAGR (%) over FY2011-13E; In case of Neutral recommendation TP=fair value
April 18, 2011
3
Britannia Industries | Initiating Coverage
Investment arguments
Revenue growth to be aided by higher volumes
Category growth indicates higher per capita biscuit consumption
Biscuit industry is the fastest growing
The biscuit industry, which has been steadily recording double-digit value growth
FMCG
category,
witnessing
over FY2008-11, is the largest and the fastest growing FMCG category in India.
double-digit
value
growth and
The industry stands at ~`10,782cr in value and has recorded a 9.2% CAGR over
increased per capita consumption
FY2006-11. Biscuit volume growth is estimated to be at ~6% yoy in FY2011E
(refer Exhibit 9), despite no significant change in distribution network (refer Exhibit
7), implying that the key reason for increased biscuit volumes is higher per capita
consumption of biscuits to ~2.1kg/year (1.8kg/year in FY2009), with a 55%
penetration level in the rural market and 85% penetration in the urban market.
Exhibit 7: Sale of small grocery retailers in FY2010 increased by 40bp yoy, implying increased impulse buying
Sale of biscuits by distribution format (%)
FY2006
FY2007
FY2008
FY2009
FY2010 FY2011E
Small grocery retailers
80.8
80.4
79.9
80.5
80.9
80.9
Other grocery retailers
12.9
12.8
12.8
11.1
11.1
10.6
Supermarkets/Hypermarkets
6.3
6.8
7.3
8.4
8.0
8.4
Total
100.0
100.0
100.0
100.0
100.0
100.0
Source: Euromonitor International, Angel Research
Britannia is a dominant player in the Indian biscuits market with a ~35% market
share and a balanced portfolio with seven super brands namely Tiger, Milk Bikis,
Good Day, Treat, Marie Gold, 50-50 and NutriChoice.
Exhibit 8: Britannia leads the pack in terms of brand market share
(%)
FY2007 FY2008
FY2009
FY2010
Britannia
36.0
36.2
35.5
34.9
Parle
32.5
31.4
31.2
33.0
ITC (Sunfeast)
7.9
10.0
11.8
11.5
Surya Foods & Agro Pvt. Ltd. (Priyagold)
2.0
2.0
2.2
2.3
Cadbury India (Bytes)
0.9
1.1
1.3
1.4
GSKCHL (Horlicks)
1.0
0.8
0.8
0.7
Others
19.7
18.5
17.2
16.2
Source: Euromonitor International, Angel Research
Despite high cost of commodities such as sugar, milk and palm oil in FY2010-11
(refer Exhibit 11), Britannia was able to maintain its market leadership on account
of its ability to distribute to rural areas as well as maintain minimal price increases
(Britannia took a price increase of 5-10% across its portfolio in 1QFY2011).
Low-price, value-added products aid Britannia’s volume growth
Britannia reaching to the bottom of the
Britannia has made significant efforts to provide premium biscuits under its brands
pyramid to fuel volume growth
Tiger and Treat at lower price points (`5 for a three-piece pack of cream biscuits).
This move in our opinion will give consumers a choice to up trade from plain
glucose variants as well as maintain affordability of biscuits for mass consumption.
Hence, we expect volume growth for Britannia to be in line with the industry at
~6% over FY2011-13E, driven by low-price, value-added products.
April 18, 2011
4
Britannia Industries | Initiating Coverage
Exhibit 9: ‘On-the-go consumption’ mantra to fuel volume growth, likely to grow in line with the industry
FY2006 FY2007 FY2008 FY2009 FY2010 FY2011E FY2012E FY2013E # FY2006-11 #FY2011-13E
Biscuit volume (Industry)
850
916
1,048
1,167
1,244
1,321
1,398
1,476
9.2
5.7
Growth (% yoy)
7.8
14.4
11.4
6.6
6.2
5.8
5.6
Biscuit volume (Britannia)
347
430
442
477
478
520
553
582
8.4
5.8
Growth (% yoy)
24.0
2.8
7.9
0.2
8.9
6.3
5.3
Biscuit value (Industry)
6,101
6,653
7,494
8,770
9,746
10,782
11,159
11,674
12.1
4.1
Growth (% yoy)
9.0
12.7
17.0
11.1
10.6
3.5
4.6
Biscuit value (Britannia)
1,676
2,091
2,330
2,738
2,928
3,539
4,027
4,558
16.1
13.5
Growth (% yoy)
24.8
11.4
17.5
6.9
20.9
13.8
13.2
Source: Euromonitor International, Company, Angel Research; Note: Volume growth is measured in ‘000tonnes and value growth in `cr, # represents CAGR
Focus on niche product categories will command high
realisations
New product launches and diverse
We expect Britannia to register a ~14% CAGR in its top line, aided by improving
product mix to improve realisations
sales mix (Britannia has recently introduced premium products in the health and
wellness space). Further, we have modeled in the 5-6% increase in the company’s
realisation on the back of recent price hikes (price hikes of 5-10% taken in
1QFY2011, further price hikes cannot be ruled out). We expect consumers’ up
trading to value-added biscuits (positioned in the health and wellness space) from
plain glucose variant of biscuits to support value growth.
Exhibit 10: Gross revenue breakup of Britannia
6,000
5,000
4,000
3,000
2,000
1,000
-
FY06
FY07
FY08
FY09
FY10
FY11E FY12E FY13E
Biscuits & High Protein Food
Bread and Suji Toast
Cakes & Rusk
Others
Source: Company, Angel Research
April 18, 2011
5
Britannia Industries | Initiating Coverage
Margins to improve on the back of cooling raw-material prices
Cooling raw-material prices to drive
Over the past one year, raw-material prices have been trending high, putting
EBITDA margin expansion to
7% in
significant margin pressure on Britannia. However, prices of major commodities
FY2013
such as sugar and wheat have shown some signs of cooling in the past one
month. While we have limited visibility on raw-material prices over the longer term,
with the onset of normal monsoons, we do not expect a significant rise in the prices
of these commodities going ahead. Moreover, we believe the company’s various
cost rationalisation methods and improving sales mix will aid operating margins
from the current level of ~5% to 5.6% in FY2012E and 7% in FY2013E.
Exhibit 11: CMP of key raw materials below 4Q prices
1QFY2011 2QFY2011 3QFY2011 4QFY2011
#CMP
Palm oil (MYR/tonne)
2,529
2,639
3,268
3,713
3,415
% qoq (palm oil)
(1.5)
4.3
23.8
13.6
(8.0)
Wheat (`/quintal)
1,173
1,230
1,281
1,316
1,211
% qoq (wheat)
(11.5)
4.9
4.1
2.7
(8.0)
Sugar (`/100kg)
2,856
2,749
3,006
2,999
2,890
% qoq (sugar)
(21.4)
(3.8)
9.3
(0.2)
(3.6)
Source: Bloomberg, Angel Research; Note: #Price as on April 7, 2011, MYR=Malaysia Ringgit
Exhibit 12: Lower raw-material prices to improve OPM
Exhibit 13: Expect investments on brands to continue
14.0
450
7.9
9.0
11.7
7.4
7.4
7.3
400
7.0
8.0
12.0
6.8
350
6.3
6.2
7.0
9.0
10.0
8.4
300
6.0
8.0
7.0
250
5.0
8.5
5.9
5.6
200
391
4.0
6.0
7.4
4.8
4.6
349
150
304
3.0
5.8
269
4.0
100
211
2.0
4.9
180
4.6
136
3.6
50
107
1.0
2.0
3.4
3.0
-
-
-
FY06
FY07
FY08
FY09
FY10
FY11E FY12E FY13E
FY06
FY07
FY08
FY09
FY10
FY11E FY12E FY13E
(OPM %)
(NPM %)
Advertisement expense
Advt. cost/sales
Source: Company, Angel Research
Source: Company, Angel Research
Financial outlook
Higher volumes and realisation to aid top line
During FY2011-13E, we expect Britannia to report strong top-line growth of
14.2%, driven largely by increased volumes and a 5-6% increase in realisations on
account of absorption of the recent rate hikes. We expect Britannia to register
volume growth in line with the industry at ~6% over the same period, driven
largely by low-price, value-added products. While, we have factored a decrease in
raw material price as % of sales as we do not expect the raw material to spike
tremendously on account of onset of normal monsoons (forecasted), we still factor
the raw material costs as % of sales almost in-line with FY2010 levels.
April 18, 2011
6
Britannia Industries | Initiating Coverage
Exhibit 14: Revenue Assumption
FY09
FY10 FY11E FY12E
FY13E
#FY11-13E Key Growth Drivers
Biscuits & High Protein Food
Revenue
2,738
2,928
3,539
4,027
4,558
13.5 Rate hike absorption and introduction of
Growth (%)
17.5
6.9
20.9
13.8
13.2
premium niche products
Volume
477
478
520
553
582
5.8 low price value added products to encourage
Growth (%)
7.9
0.2
8.9
6.3
5.3
up-trading from plain glucose variant biscuits
Bread and Suji Toast
Revenue
284
347
426
512
592
17.8
Growth (%)
45.0
22.3
22.9
20.1
15.5
Volume
105
117
131
145
159
10.0 on the go consumption and relevant consumer
Growth (%)
24.4
11.6
12.2
10.0
10.0
activation is likely to drive growth
Cakes & Rusk
Revenue
99
119
144
174
212
21.2
Growth (%)
28.0
21.1
21.1
20.8
21.7
Volume
9
11
13
15
18
17.7
increase in rusk throughput by way of both
Growth (%)
12.0
19.3
16.4
17.3
18.1
brownfield and greenfield projects
Others
Largely income from dairy business
Revenue
23
30
39
49
54
17.3 Incremental growth from national launch of
Growth (%)
49.9
32.9
30.0
25.0
10.0
Actimind, Tiger Zor, and Healthy Start
Gross Sales Total
3,143
3,425
4,150
4,763
5,415
14.2
Source: Company, Angel Research; Note: # CAGR (%), Volume growth in ‘000s tonnes and value growth in `cr
Exhibit 15: Expenditure Assumption
(`cr)
FY09 FY10 FY11E
FY12E
FY13E
#FY11-13E
Raw material
1,910
2,169
2,663
3,017
3,385
12.7 Expect cooling of raw material going ahead,
% of sales
61.4
63.8
64.8
64.0
63.1
with the onset of normal monsoons
Staff cost
96
100
116
132
150
13.8
% of sales
3.1
2.9
2.8
2.8
2.8
SG&A expenses
822
947
1,113
1,271
1,413
12.6 Modeling 13% CAGR to support new product launches.
% of sales
26.4
27.9
27.1
27.0
26.4
Expect brand investments to sustain
Power cost
21
22
29
33
38
14.2 Modeled flat as a % of sales
% of sales
0.7
0.7
0.7
0.7
0.7
EBITDA
263
163
187
262
376
41.7
OPM (%)
8.4
4.8
4.6
5.6
7.0
Increased due to issue of bonus debenture
(8.25%
Interest Expense
16
8
41
41
41
(0.2)
coupon rate)
Reported PAT
180
117
125
171
248
41.0
Source: Company, Angel Research; Note: # CAGR (%)
April 18, 2011
7
Britannia Industries | Initiating Coverage
Key concerns
Volatility in agri-based commodities: We have modeled in an improvement in
the company’s EBITDA margins to 7% in FY2013E, on the backdrop of cooling
agri-based commodities. However, the extreme volatile nature of agri-based
commodities can act as a bottleneck in Britannia’s margin expansion and
growth.
Economic growth: Any slowdown in India’s economic growth story could lead
to down trading of products such as biscuits (not a primary food item). This
could lead to loss of sales and further affect margins as Britannia has many
premium products in its basket. Higher food inflation is also a major concern
for the company.
New product launches: Britannia’s foray into breakfast cereals and other
premium products could lead to tighter margins as new products demand lot
of efforts on the marketing front. Higher ad spends and other promotional
activities can pull down margins.
Company background
Britannia is one of the foremost food companies in India, with presence in biscuits,
dairy products, breads and has recently forayed into breakfast cereals category
with the launch of Healthy Start. The company derives ~85% of its revenues from
biscuits and have formidable brands such as Tiger (glucose biscuits), Treat (cream
biscuits), 50-50 (crackers), Good Day (premium cookies and its highest selling
brand) and Nutrichoice (premium high fiber biscuits).
Britannia forayed into dairy business in 2002 through its subsidiary Britannia New
Zealand foods Pvt. Ltd. (BNZF), which was run as a JV with Fonterra, world’s
second largest dairy company. In 2009, Britannia acquired Fonterra’s 49% stake
and BNZF was renamed as Britannia Dairy Pvt. Ltd. (BDPL), which became a
wholly owned subsidiary of Britannia. BDPL offers dairy products, including cheese,
dairy whitener, yoghurt, butter and ghee. The company marked its presence in
retail bakery business with51% acquisition of Bangalore based food retailer, Daily-
Bread.
Exhibit 16: Britannia’s FY2010 sales mix
3.5%
0.9%
10.1%
85.5%
Biscuits & High Protein Food
Bread
Cakes & Rusk
Others
Source: Company, Angel Research
April 18, 2011
8
Britannia Industries | Initiating Coverage
Profit and Loss Statement
Y/E March (` cr)
FY2009
FY2010
FY2011E
FY2012E
FY2013E
Gross sales
3,143
3,425
4,150
4,763
5,415
Less: Excise duty
31
23
41
48
54
Net Sales
3,112
3,401
4,108
4,715
5,361
Total operating income
3,112
3,401
4,108
4,715
5,361
% chg
20.4
9.3
20.8
14.8
13.7
Total Expenditure
2,849
3,238
3,921
4,453
4,986
Cost of Materials
1,910
2,169
2,663
3,017
3,385
Advertising Exp (Incl Prom)
211
269
304
349
391
Personnel
96
100
116
132
150
Others
632
701
838
955
1,059
EBITDA
263
163
187
262
376
% chg
13.4
(37.8)
14.5
40.2
43.3
(% of Net Sales)
8.4
4.8
4.6
5.6
7.0
Depreciation& Amort
33
38
42
47
52
EBIT
229
126
145
215
323
% chg
13.1
(45.2)
15.0
48.9
50.1
(% of Net Sales)
7.4
3.7
3.5
4.6
6.0
Interest & other Charges
16
8
41
41
41
Other Income
40
56
66
57
54
(% of PBT)
15.8
32.3
38.9
24.5
16.0
Share in profit of Asso
-
-
-
-
-
Recurring PBT
253
174
169
231
336
% chg
4.1
(31.4)
(2.8)
36.6
45.5
Prior Period & Extra Exp/(Inc.)
20.63
52.87
-
-
-
PBT (reported)
233
121
169
231
336
Tax
52
4
44
60
87
(% of PBT)
20.6
2.5
26.0
26.0
26.0
PAT (reported)
201
169
125
171
248
Add: Share of earnings of ass
-
-
-
-
-
Less: Minority interest (MI)
-
-
-
-
-
PAT after MI (reported)
201
169
125
171
248
ADJ. PAT
180
117
125
171
248
% chg
(5.6)
(35.4)
7.2
36.6
45.5
(% of Net Sales)
5.8
3.4
3.0
3.6
4.6
Basic EPS (`)
15.1
9.8
10.5
14.3
20.8
Fully Diluted EPS (`)
15.1
9.8
10.5
14.3
20.8
% chg
(5.6)
(35.4)
7.2
36.6
45.5
April 18, 2011
9
Britannia Industries | Initiating Coverage
Balance sheet
Y/E March (` cr)
FY2009
FY2010
FY2011E
FY2012E
FY2013E
SOURCES OF FUNDS
Equity Share Capital
24
24
24
24
24
Share Capital suspense account
-
-
-
-
-
Reserves& Surplus
801
372
425
483
584
Shareholders’ Funds
825
396
449
507
608
Minority Interest
-
-
-
-
-
Total Loans
25
430
429
429
23
Deferred Tax Liability
10
(7)
(7)
(7)
(7)
Total Liabilities
860
819
871
929
623
APPLICATION OF FUNDS
Gross Block
512
548
642
720
806
Less: Acc. Depreciation
234
266
309
355
408
Net Block
278
282
333
364
398
Capital Work-in-Progress
6
12
13
15
17
Goodwill
-
-
-
-
-
Investments
423
491
431
431
161
Current Assets
539
521
674
808
842
Cash
41
23
27
72
14
Loans & Advances
195
190
226
252
279
Other
14
14
20
25
35
Current liabilities
413
486
580
688
795
Net Current Assets
126
36
93
119
48
Mis. Exp. not written off
27
-
-
-
-
Total Assets
860
819
871
929
623
Cash flow statement
Y/E March (` cr)
FY2009
FY2010
FY2011E
FY2012E
FY2013E
Profit before tax
233
121
169
231
336
Depreciation
33
38
42
47
52
Change in Working Capital
0.5
108
9
25
18
Interest / Dividend (Net)
(5)
(25)
2
4
16
Direct taxes paid
52
73
44
60
87
Payment of VRS
(3)
27
-
-
-
Profit on sale of invst/FA (Net)
7
12
9
-
-
Others
35
(4)
(53)
(34)
(31)
Cash Flow from Operations
233
179
116
212
303
(Inc.)/ Dec. in Fixed Assets
(55)
(42)
(96)
(80)
(88)
(Inc.)/ Dec. in Investments
(42)
(68)
60
-
270
Cash Flow from Investing
(97)
(109)
(36)
(80)
182
Inc./(Dec.) in loans
(81)
(2)
(1)
-
(406)
Dividend Paid (Incl. Tax)
59
105
70
78
117
Interest/Dividend paid (Net)
(1)
(21)
6
8
20
Cash Flow from Financing
(139)
(87)
(77)
(87)
(543)
Inc./(Dec.) in Cash
(3)
(17)
3
46
(58)
Opening Cash balances
44
41
23
27
72
Closing Cash balances
41
23
27
72
14
April 18, 2011
10
Britannia Industries | Initiating Coverage
Key Ratios
Y/E March
FY2009 FY2010 FY2011E FY2012E FY2013E
Valuation Ratio (x)
P/E (on FDEPS)
25.0
38.7
36.1
26.4
18.1
P/CEPS
19.2
21.8
26.9
20.7
15.0
P/BV
5.5
11.4
10.0
8.9
7.4
Dividend yield (%)
1.4
1.3
1.1
0.9
0.8
EV/Sales
1.4
1.3
1.1
0.9
0.8
EV/EBITDA
16.6
26.7
23.3
16.6
11.6
EV / Total Assets
5.1
5.3
5.0
4.7
7.0
Per Share Data (`)
EPS (Basic)
15.1
9.8
10.5
14.3
20.8
EPS (fully diluted)
15.1
9.8
10.5
14.3
20.8
Cash EPS
19.6
17.3
14.0
18.2
25.2
DPS
8.0
5.0
5.2
8.0
10.6
Book Value
69.0
33.2
37.5
42.5
50.9
Returns (%)
RoCE
26.7
15.0
17.1
23.9
41.6
Angel ROIC (Pre-tax)
22.3
15.2
13.1
18.7
32.6
RoE
25.4
27.7
29.6
35.7
44.5
Turnover ratios (x)
Asset Turnover (Gross Block)
6.1
6.2
6.4
6.6
6.7
Inventory / Sales (days)
30
29
33
33
33
Receivables (days)
6
4
4
4
4
Payables (days)
31
34
36
35
35
Wrkg cap cycle (ex-cash) (days)
19
7
9
9
8
April 18, 2011
11
Britannia Industries | Initiating Coverage
Research Team Tel: 022 - 39357800
DISCLAIMER
This document is solely for the personal information of the recipient, and must not be singularly used as the basis of any investment
decision. Nothing in this document should be construed as investment or financial advice. Each recipient of this document should make
such investigations as they deem necessary to arrive at an independent evaluation of an investment in the securities of the companies
referred to in this document (including the merits and risks involved), and should consult their own advisors to determine the merits and
risks of such an investment.
Angel Broking Limited, its affiliates, directors, its proprietary trading and investment businesses may, from time to time, make
investment decisions that are inconsistent with or contradictory to the recommendations expressed herein. The views contained in this
document are those of the analyst, and the company may or may not subscribe to all the views expressed within.
Reports based on technical and derivative analysis center on studying charts of a stock's price movement, outstanding positions and
trading volume, as opposed to focusing on a company's fundamentals and, as such, may not match with a report on a company's
fundamentals.
The information in this document has been printed on the basis of publicly available information, internal data and other reliable
sources believed to be true, but we do not represent that it is accurate or complete and it should not be relied on as such, as this
document is for general guidance only. Angel Broking Limited or any of its affiliates/ group companies shall not be in any way
responsible for any loss or damage that may arise to any person from any inadvertent error in the information contained in this report.
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nor make any representation or warranty, express or implied, to the accuracy, contents or data contained within this document. While
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connection with the use of this information.
Note: Please refer to the important `Stock Holding Disclosure' report on the Angel website (Research Section). Also, please refer to the
latest update on respective stocks for the disclosure status in respect of those stocks. Angel Broking Limited and its affiliates may have
investment positions in the stocks recommended in this report.
Disclosure of Interest Statement
Britannia
1. Analyst ownership of the stock
No
2. Angel and its Group companies ownership of the stock
No
3. Angel and its Group companies' Directors ownership of the stock
No
4. Broking relationship with company covered
No
Note: We have not considered any Exposure below ` 1 lakh for Angel, its Group companies and Directors
Ratings (Returns):
Buy (> 15%)
Accumulate (5% to 15%)
Neutral (-5 to 5%)
Reduce (-5% to 15%)
Sell (< -15%)
April 18, 2011
12
Britannia Industries | Initiating Coverage
6th Floor, Ackruti Star, Central Road, MIDC, Andheri (E), Mumbai- 400 093.
Tel: (022) 39357800
Research Team
Fundamental:
Sarabjit Kour Nangra
VP-Research, Pharmaceutical
Vaibhav Agrawal
VP-Research, Banking
Shailesh Kanani
Infrastructure
Sageraj Bariya
Fertiliser, Mid-cap
Srishti Anand
IT, Telecom
Bhavesh Chauhan
Metals, Mining
Jai Sharda
Mid-cap
Sharan Lillaney
Mid-cap
Naitik Mody
Mid-cap
Chitrangda Kapur
FMCG, Media
Amit Vora
Research Associate (Oil & Gas)
V Srinivasan
Research Associate (Cement, Power)
Mihir Salot
Research Associate (Logistics, Shipping)
Pooja Jain
Research Associate (Metals & Mining)
Yaresh Kothari
Research Associate (Automobile)
Shrinivas Bhutda
Research Associate (Banking)
Sreekanth P.V.S
Research Associate (FMCG, Media)
Hemang Thaker
Research Associate (Capital Goods)
Nitin Arora
Research Associate (Infra, Real Estate)
Ankita Somani
Research Associate (IT, Telecom)
Varun Varma
Research Associate (Banking)
Vasant Lohiya
Research Associate (Banking)
Poonam Sanghvi
Research Associate (Pharma)
Technicals:
Shardul Kulkarni
Sr. Technical Analyst
Mileen Vasudeo
Technical Analyst
Derivatives:
Siddarth Bhamre
Head - Derivatives
Jaya Agarwal
Derivative Analyst
Institutional Sales Team:
Mayuresh Joshi
VP - Institutional Sales
Abhimanyu Sofat
AVP - Institutional Sales
Pranav Modi
Sr. Manager
Jay Harsora
Manager
Meenakshi Chavan
Dealer
Gaurang Tisani
Dealer
Production Team:
Simran Kaur
Research Editor
Bharat Patil
Production
Dilip Patel
Production
Angel Broking Ltd: BSE Sebi Regn No : INB 010996539 / CDSL Regn No: IN - DP - CDSL - 234 - 2004 / PMS Regn Code: PM/INP000001546 Angel Securities Ltd:BSE: INB010994639/INF010994639 NSE: INB230994635/INF230994635 Membership numbers: BSE 028/NSE:09946
Angel Capital & Debt Market Ltd: INB 231279838 / NSE FNO: INF 231279838 / NSE Member code -12798 Angel Commodities Broking (P) Ltd: MCX Member ID: 12685 / FMC Regn No: MCX / TCM / CORP / 0037 NCDEX : Member ID 00220 / FMC Regn No: NCDEX / TCM / CORP / 0302
April 18, 2011
13
