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Dolat Capital Report
Britannia Industries Ltd.'s Q2 FY24 revenues were in line but profitability was ahead of our estimate. The company reported flat volume growth during the quarter.
Considering increased competition from the local players, we believe that Britannia Industries would have to pass on prices to increase volume growth. Hence volume growth would lead the value growth going ahead. However, margins are likely to sustain at higher levels with deflation in key commodities.
New product launches and brand innovations (4.5-5% of sales) continue to remain Britannia Industries' focus. These new products would help reduce dependency on conventional biscuit business and create new levers for growth in a long run.
We have upward revised our FY24/25E earnings per share by 9.3/5.4% at Rs 92.1/100.3 to factor in Q2 performance and anticipated higher margins, going ahead.
We have introduced FY26E EPS at Rs 107.9. We value the stock at 46 times FY26E to arrive at target price of Rs 4,964. Upgrade to 'Accumulate'.
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