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Prabhudas Lilladher Report
Britannia Industries Ltd. continues to gain share in core biscuits and bakery segment and scale adjacencies and innovations like Biscafe, Nutrichoice Herbs, Marble cake, Croissants etc. with sales up 1-4 times since Q1 FY23.
While palm oil (down 50% from peak) and skimmed milk powder (down 40% from peak) are favorable, benefits of lower cost wheat futures will end in FY23 and new season procurement price will be higher by ~10-15% (30-35% higher as of now) in our view.
We believe 19.5% Ebitda margin is unsustainable and factor in 17.8/18% margins for FY24/25. Britannia continues to build long term growth drivers with-
28,000 rural preferred dealers (26,000 in Q4 FY22),
rising share of modern trade sales with improved mix,
higher growth in focus states,
cost efficiency gains in manufacturing, distribution and procurement,
sustained innovation program and
Dairy expansion plans in new categories in Ranjangaon Dairy unit.
We estimate 13.2%/18.6% sales and profit after tax compound annual growth rate over FY22-25.
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