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ICICI Securities Report
Britannia Industries Ltd.'s volumes up 5%, price plus mix up 17%, revenues up 22% - all surprised consensus positively. We believe amid a not-so-buoyant demand backdrop, it continues to drive market shares gains (15-year high) in weak markets and distribution expansion (rural markets).
We note that it has redeemed Rs 7.2 billion of bonus debentures in Aug-22; borrowings have been higher (in H1 FY23) with higher inventory, dividends.
Raising of long-term debt may be potentially interpreted as for dividend payout.
Britannia has seen one of the most resilient (core) performance in the last three years (backed by share gains).
Consensus (including us) expects Britannia to invest in new categories, till now, pressure on core margins was not providing ammunition. That said, it will now have to re-earn the (premium) multiple as consensus was generous in previous re-rating cycle (narrative of Total Foods Company pre Covid).
Going forward, success of (at least a few) new segments and ramp-up of adjacent categories is imperative. The outlook on this appears better.
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