Britannia Industries Target Price Raised To Rs 6,500 As Citi Maintains ‘Buy’ On Margin Optimism
Despite a tough operating environment, Britannia has maintained consistent performance and healthy return ratios, which remain ahead of many peers, says Citi.
Citi has revised Britannia Industries Ltd.'s target price to Rs 6,500 from Rs 6,200, as it remains upbeat about the company's earnings trajectory, supported by easing input costs and strategic execution.
While the brokerage has maintained its 'Buy' rating it has applied a higher multiple of 52x FY27E EPS (previously 50x) to hike the target price. This comes as Citi marginally raised its financial year 2026–2028 earnings estimate for Britannia Industries Ltd. by 0–1%, factoring in improved margin assumptions amid softening commodity costs.
The recent 10% cut in palm oil duties is expected to support profitability, the brokerage added.
Valuation Basis
Despite a tough operating environment, Britannia has maintained consistent performance and healthy return ratios, which remain ahead of many peers.
Citi sees an earnings-based valuation as appropriate, given Britannia’s stable business profile. The stock has historically traded at a P/E range of 32x–60x (average \~48x), and the new target multiple reflects confidence in the company’s medium-term earnings outlook.
While Britannia’s absolute valuation is on the higher side, Citi believes it is justified due to the company’s strong fundamentals—robust execution, solid competitive positioning, and continued growth potential through innovation, new category expansion, and distribution improvements.
The higher valuation reflects improving growth prospects and strong fundamentals, despite a few external risks that bear monitoring.
Risks to Outlook
Slower revenue growth due to weak macro trends or heightened competition, particularly from regional players, is one of the risks noted by Citi.
A resurgence in commodity inflation, which could also squeeze margins.
Limited success of new product launches or investments and negative shifts in product mix are some of the other risks.
Upside Catalysts
On the upside, Citi notes several factors that could lift Britannia’s performance above current expectations. These include market share gains driving stronger top-line growth and higher-than-expected cost savings boosting margins.
Stronger traction in the non-biscuits segment and success of recent investments is another upside for the company.
