Britannia Industries Ltd.

Q3FY24 Result Update | FMCG

Equity Research Desk

Consistent Performer 8 February 2024

Rating TP (Rs) Up/Dn (%)

Britannia Consolidated Q3FY24 results BUY ON DIPS 5,375 10
were in line with expectations. Market dat a

• Revenue increased by 2.2% YoY to Rs 41918mn with 5.5% Current pric e Rs 4, 871
Market Cap (Rs.Bn) (Rs Bn) 1,174
volume growth. Price corrective actions were taken to fight
Market Cap (US$ Mn) (US$ Mn) 14,154
local regional competition and maintain market shares Fac e Value Rs 1
• EBIDTA margins stood at 19.3% as against 19.5% on a YoY 52 Weeks High/Low Rs 5386.25 / 4153

basis, even on a QoQ basis gross margins were stable above Av erage Daily Volume ('000) 1,283
BSE Code 500825
19% mark.
Bloomberg BRIT.IN
• EBIDTA on absolute basis grew by 0.4% YoY to Rs 8210.9mn So urce: B lo o mberg

• Reported PAT de-grew by 40.4% YoY to Rs 5556.6mn mainly

because last year Q3FY24 had an exceptional item of Rs One Year Performance
130
3760mn, on account of profit on sale of 49% equity stake in
120
Britannia Dairy Private Limited (BDPL) & fair valuation of
110
balance 51% held in BDPL, pursuant to JV agreement entered
100
with BEL. 90
• PAT (adjusted-owners share) de-grew by 2.6% YoY to Rs 80
5585mn 70
Feb-23

Britannia Industries Ltd Nifty Index

Outlook:
• Double digit volume growth to come in next few quarters. Source: Bloomberg

• Focus remains on maintaining market share and will remain

% Shareho lding Dec-23 Sep-23
vigilant on commodity/pricing actions to be taken.
Promoters 50.55 50.55
• Monitoring stock-price situation of commodities
Public 49.55 49.55
• Strategy wise remain focused on driving market share while Total 100 100
sustaining profitability
Source: BSE

Financial Summary
Y/E Mar (Rs mn) FY22 FY23 FY24E FY25E FY26E
Net sales 141,363 163,005 168,510 185,529 204,459
EBIDTA 22,015 28,309 31,714 33,897 37,336
Margins 15.6 17.4 18.8 18.3 18.3
PAT (adj) 15,255 19,519 21,400 23,020 25,891
grow th (% ) (18.2) 27.9 9.6 7.6 12.5
EPS 63.3 81.0 88.8 95.6 107.5
P/E (x) 76.9 60.1 54.8 51.0 45.3
P/B (x) 45.9 33.2 29.8 23.1 18.4
EV/EBITDA (x) 53.6 41.3 37.3 34.7 31.4 Kunal Bhatia
+91 22 67141442
RoE (% ) 59.6 55.2 54.3 45.2 40.6
kunal.bhatia@dalal-broacha.com
ROCE (% ) 39.6 39.8 42.7 41.0 40.4
Source: Dalal and Broacha

Please refer to our disclaimer given at the last page. |1|

 Britannia Industries Ltd. DALAL & BROACHA STOCK BROKING PVT LTD

Conference Call KTA’s continue

Britannia Q3FY24 Concal KTA's

VOLUME Growth: +5.5%, packet growth ~3.5%

Urban growth was better than

Rural Growth
Rural Growth
gap with 2nd largest player
widen
MARKET SHARE:

Double digit volume growth

Demand: should come back in next few
quarters
Focus Stats grew 2.4x Rest of
India

YoY ~ -4%
QoQ ~ -2-3%
Pricing Action
Input cost on a QoQ basis
delated 2-3%

21C oven can use any kind of

fuel depending on the price
giving cost efficiency
(proprietry technology)
Competitive Edge Last 15 Years: Transitioned
from Small Factory 2lines with
1800tpm output to mega food
park 17 lines with 16000tpm
output

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 Britannia Industries Ltd. DALAL & BROACHA STOCK BROKING PVT LTD

Conference Call KTA’s continue

INFLATION
1.Food Commodity
inflation:
Inflation: Wheat Flour -1% QoQ || +10% YoY

Inflation: Palm Oil -2% QoQ || -18% YoY

Inflation Sugar: +7% QoQ || +8% YoY

Laminates: 0% QoQ || -9% YoY
Corrugated Boxes -3% QoQ || -16% YoY

OTHER COSTS
1. Ad-Spends &
no specific comments
Sales Promotion:

Cost Efficiency target 7x of FY14

One of the best in class with
2. Cost Efficiency
contribution from
Savings
Procurement+R&D+Sales &
Marketing teams

DISTRIBUTION:
1.Direct Reach in
27.6 in Dec-23 v/s 26.4 Dec-22
lakhs
Rural Distribution @ 29K v/s
28K YoY

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 Britannia Industries Ltd. DALAL & BROACHA STOCK BROKING PVT LTD

Conference Call KTA’s continue

Market Share trends have

come back
Infaltion in Q3FY24 cooled off
Other KTA's
faster than expected
Cheese visibility of Rs 1000crs
in 5 years
19% EBIDTA margins is peak
E-Com Contribution ~2.9% of
total business v/s ~ 1% few
years back

Double digit volume growth to

come in next few quarters
monitoring stock-price
situation of commodities
Outlook: Focus in Market Share growth
with necessary price actions
strategy will remain focused
on driving market share while
sustaining profitability
Source: Dalal & Broacha Research, Company

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 Britannia Industries Ltd. DALAL & BROACHA STOCK BROKING PVT LTD

Quarterly Financials
Particulars (Rs Mns)
Consolidated Q3FY24 Q3FY23 Growth Q2FY24 Growth
Net S ales 41,918.3 41,014.9 2.2% 43,704.7 -4.1%
Other Op Income 645.0 953.1 -32.3% 624.1 3.3%
Total OP Income 42,563.3 41,968.0 1.4% 44,328.8 -4.0%
Add: O. Income 505.6 507.5 -0.4% 523.5 -3.4%
Total Income 43,068.9 42,475.5 1.4% 44,852.3 -4.0%

RAW MATE RIALS (23,890.8) (23,646.8) 1.0% (25,317.6) -5.6%

E mployee Cost (1,984.6) (1,782.4) 11.3% (1,598.7) 24.1%
O. E xps (8,477.0) (8,363.0) 1.4% (8,688.3) -2.4%
E B IDTA 8,716.5 8,683.3 0.4% 9,247.7 -5.7%
EBIDTA Less O. Inc 8,210.9 8,175.8 0.4% 8,724.2 -5.9%
Less Int (310.9) (381.3) -18.5% (534.2) -41.8%
Less Depn (780.9) (579.6) 34.7% (716.8) 8.9%
Less E xceptional (29.0) - -
PBT Before Exceptional 7,624.7 7,722.4 -1.3% 7,996.7 -4.7%

PBT 7,595.7 7,722.4 -1.6% 7,996.7 -5.0%

E xtraordinary Net 3,756.0
S hare of P rofit/Loss from
Associate (13.4) 14.7 -191.2% (10.4) 28.8%
Minority Interest - - -
P AT Reportd 5,556.6 9,324.0 -40.4% 5,865.0 -5.3%
PAT Adjusted Owner
S hare 5,585.2 5,734.0 -2.6% 5,875.9 -4.9%

E quity 240.9 240.9 240.9

EPS ( Adjusted PAT) 23.2 23.8 24.4
OP M 19.3% 19.5% -0.2% 19.7%
NP M 13.0% 13.1% 13.1%
Tax Rate -26.6% -28.1% -26.5%

% to Operating Income
RAW MATE RIALS -56.1% -56.3% 0.2% -57.1%
E mployee Cost -4.7% -4.2% -0.4% -3.6%
O. E xps -19.9% -19.9% 0.0% -19.6%
Total -80.7% -80.5% -0.2% -80.3%

Source: Dalal & Broacha Research, Company

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 Britannia Industries Ltd. DALAL & BROACHA STOCK BROKING PVT LTD

Valuation
F&B Consumption Occasions per day has risen from 3.9 times in 2021 to 5.1times in 2023.
Within this biscuits consumption occasions have also risen from 303 times in a year in 2018 to 370
times in 2023 (Biscuits forms ~70% of Britannia’s Revenue), going forward taking in to account the
rise women workforce, demand for packaged food is bound to increase.

Britannia stands out in the FMCG industry for its focused approach, especially within the bakery
space. Unlike other FMCG companies, Britannia opts for less diversification, preferring to move in
concentric circles within its core area of expertise.

The management's strategy is crystal clear: expand into adjacent categories where Britannia has the
"Right to Succeed." With 11 new plants added in the last decade and an impressive 65% of
production conducted in-house, Britannia has laid down the essential building blocks for growth.

In light of the booming Rs 1 trillion Branded FMCG space, which is experiencing double-digit
growth, Britannia is poised for significant expansion and succes

The management have time and again proved themselves generating excellent results and are
confident of maintaining the current level of EBIDTA margins in near future.

We rollover to FY26 estimates.

At CMP of Rs 4,871 Britannia trades at 51x FY25e EPS of Rs 95.6 and 45.3x FY26e EPS of Rs 107.5
We maintain BUY ON DIPS with a target price of Rs 5,375 (i.e.50x FY26 earnings).

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 Britannia Industries Ltd. DALAL & BROACHA STOCK BROKING PVT LTD

Financials
P&L (Rs mn) FY22 FY23 FY24E FY25E FY26E
Net Operating Income 141,362.6 163,005.5 168,510.0 185,528.9 204,458.6

R aw materials (87,603.0) (95,913.0) (95,824.1) (106,493.6) (117,359.2)

E mployee costs (5,422.6) (6,583.8) (7,456.0) (8,350.7) (9,352.8)
Other E xpenses (26,321.9) (32,199.6) (33,515.5) (36,787.3) (40,410.4)
Cost of sales (119,347.5) (134,696.4) (136,795.6) (151,631.7) (167,122.4)

Operating Profit 22,015.1 28,309.1 31,714.4 33,897.3 37,336.1

Depreciation (2,005.4) (2,259.1) (3,005.8) (3,284.9) (3,564.0)
P BIT 20,009.7 26,050.0 28,708.6 30,612.4 33,772.2
Other income 2,228.3 2,158.6 2,091.4 2,022.9 2,371.4
Interest (1,442.9) (1,691.0) (1,686.7) (1,889.1) (1,569.1)
P rofit before tax 20,795.1 26,517.6 29,113.4 30,746.2 34,574.5
E xtraordinary Items /
E xceptional - 3,756.0 - - -
P rofit before tax (post
E xcep) 20,795.1 30,273.6 29,113.4 30,746.2 34,574.5
P rovision for tax (5,623.5) (7,164.5) (7,652.0) (7,738.8) (8,702.4)
Reported PAT 15,171.6 23,109.1 21,461.4 23,007.4 25,872.1
S hare of P ft and Loss
of Associates and
Minority Int 86.4 (0.4) (53.8) 13.0 19.0
Adjusted PAT 15,255.3 19,518.7 21,399.9 23,020.4 25,891.0

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 Britannia Industries Ltd. DALAL & BROACHA STOCK BROKING PVT LTD

B alance Sheet FY22 FY23 FY24E FY25E FY26E

E quity capital 240.9 240.9 240.9 240.9 240.9
R eserves 25,340.1 35,101.8 39,135.6 50,645.8 63,591.3
Net worth 25,581.0 35,342.7 39,376.5 50,886.7 63,832.2

Def. Tax Liab.+Minority Int. 275.0 302.3 255.8 209.3 162.8

S ecured loans 7,069.9 15,518.0 8,010.0 6,010.0 4,010.0
Unsecured loans 17,585.5 14,287.1 19,603.5 17,603.5 15,603.5
Total debt 24,655.4 29,805.1 27,613.5 23,613.5 19,613.5
CAPITAL EMPLOYED 50,511.4 65,450.1 67,245.8 74,709.5 83,608.5

Gross block 26,682.7 38,076.4 43,076.4 47,076.4 51,076.4

Accumulated depreciation (10,546.7) (12,805.8) (15,811.6) (19,096.4) (22,660.4)
Net block 16,136.0 25,270.6 27,264.8 27,980.0 28,416.0
Capital W IP 5,356.8 1,050.0 1,050.0 1,050.0 1,050.0
Total fixed assets 21,492.8 26,320.6 28,314.8 29,030.0 29,466.0
Goodwill 1,396.1 1,281.6 1,293.7 1,293.7 1,293.7
Investments 17,623.7 33,242.4 19,377.4 19,377.4 19,377.4
Inventories 13,674.9 11,932.6 12,926.8 13,724.1 15,124.3
S undry debtors 3,319.3 3,289.4 3,693.4 4,066.4 4,481.3
Cash & bank 1,849.0 1,979.8 13,558.5 20,609.6 28,741.3
Loans & advances 7,980.0 7,100.0 8,000.0 8,000.0 8,000.0
Other current assets 7,302.8 7,808.3 8,354.9 8,939.7 9,565.5
S undry creditors (12,852.2) (14,488.1) (14,439.2) (16,047.0) (17,684.3)
O. Current Liablities (6,932.5) (8,180.0) (8,998.0) (9,447.9) (9,920.3)
P rovisions (4,851.1) (5,390.3) (5,390.3) (5,390.3) (5,390.3)
Working capital 9,490.2 4,051.7 17,706.0 24,454.6 32,917.6
Deferred Tax Assets 508.6 553.8 553.8 553.8 553.8
Miscellaneous exp. - - - - -
CAPITAL DEPLOYED 50,511.4 65,450.1 67,245.8 74,709.5 83,608.5

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 Britannia Industries Ltd. DALAL & BROACHA STOCK BROKING PVT LTD

Cash Flow St. (Rs. mn) FY22 FY23 FY24E FY25E FY26E
Net P rofit 15,248.2 23,108.7 21,378.6 23,020.4 25,891.0
Add: Dep. & Amort. 2,005.4 2,259.1 3,005.8 3,284.9 3,564.0
Cash profits 17,253.6 25,367.8 24,384.3 26,305.3 29,455.0

(Inc)/Dec in
-S undry debtors (746.6) 29.9 (404.0) (373.0) (414.9)
-Inventories (2,760.0) 1,742.3 (994.2) (797.3) (1,400.3)
-Loans/advances 2,205.8 374.5 (1,446.6) (584.8) (625.8)
-S undry creditors (295.3) 1,635.9 (48.9) 1,607.7 1,637.3
-Others 1,813.2 1,786.7 818.0 449.9 472.4
Change in working capital 217.1 5,569.3 (2,075.6) 302.5 (331.3)
CF from Oper. activities 17,470.7 30,937.1 22,308.7 26,607.8 29,123.7

CF from Inv. activities 4,383.6 (22,591.1) 8,852.9 (4,000.0) (4,000.0)

CF from Fin. activities (22,118.7) (8,215.2) (19,582.9) (15,556.7) (16,992.0)

Cash generated/(utilised) (264.4) 130.8 11,578.7 7,051.1 8,131.7

Cash at start of the year 2,113.4 1,849.0 1,979.8 13,558.5 20,609.6
Cash at end of the year 1,849.0 1,979.8 13,558.5 20,609.6 28,741.3

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 Britannia Industries Ltd. DALAL & BROACHA STOCK BROKING PVT LTD

Ratios FY22 FY23 FY24E FY25E FY26E

OP M 15.6 17.4 18.8 18.3 18.3
NP M 10.6 11.8 12.5 12.3 12.5
Tax rate (27.0) (23.7) (26.3) (25.2) (25.2)

Growth Ratios (%)

Net S ales 7.6 15.3 3.4 10.1 10.2
Operating P rofit (12.3) 28.6 12.0 6.9 10.1
P AT (18.2) 27.9 9.6 7.6 12.5

Per Share (Rs.)

Net E arnings (E P S ) 63.3 81.0 88.8 95.6 107.5
Cash E arnings (CP S ) 72 105 101 109 122
Dividend 74.5 56.5 72.0 47.8 53.7
Book Value 106.2 146.7 163.5 211.2 265.0
Free Cash Flow 90.72 34.64 129.36 93.85 104.29

Valuation Ratios
P/E(x) 76.9 60.1 54.8 51.0 45.3
P /B(x) 45.9 33.2 29.8 23.1 18.4
E V/E BIDTA(x) 53.6 41.3 37.3 34.7 31.4
Div. Yield(% ) 1.5 1.2 1.5 1.0 1.1
FCF Yield(%) 1.9 0.7 2.7 1.9 2.1

Return Ratios (%)

R OE 59.6 55.2 54.3 45.2 40.6
R OCE 39.6 39.8 42.7 41.0 40.4
Source: Dalal & Broacha Research, Company

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 Britannia Industries Ltd. DALAL & BROACHA STOCK BROKING PVT LTD

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 Britannia Industries Ltd. DALAL & BROACHA STOCK BROKING PVT LTD

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