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Britannia reported a strong set of numbers for 2QFY2012. The company
registered top-line growth of 18.2% yoy, driven by volumes, price hikes and an
improved product mix. Earnings growth during the quarter stood strong at 18.8%
yoy. Operating margin during the quarter marginally expanded, despite higher
staff costs and ad spends. We maintain our Neutral view on the stock.
Key highlights for the quarter: Britannia registered robust top-line growth of
18.2% yoy in 2QFY2012. The company continued its impressive top-line growth
because of new product launches, price hikes and improved product mix.
Britannia has been posting ~20% top-line growth consecutively for the past seven
quarters. During the quarter, Britannia’s operating margin expanded marginally
by 9bp yoy, despite higher staff costs and ad spends, as the company managed
its raw-material costs efficiently. Earnings for the quarter grew by 18.8% yoy.
Outlook and valuation: We expect Britannia to post a ~17% revenue CAGR
(largely volume growth) over FY2011–13E and model in margin expansion of
184bp, despite sustained higher ad spends, aided by a benign input cost
environment and higher operating leverage. Further, in terms of earnings, we
expect Britannia to post a robust ~36% CAGR. At the CMP, the stock is trading at
21.5x FY2013 EPS (in-line with its historical valuations); hence, we recommend
Neutral on the stock with a fair value `495, based on 22x FY2013E EPS.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Britannia reported a strong set of numbers for 2QFY2012. The company
registered top-line growth of 18.2% yoy, driven by volumes, price hikes and an
improved product mix. Earnings growth during the quarter stood strong at 18.8%
yoy. Operating margin during the quarter marginally expanded, despite higher
staff costs and ad spends. We maintain our Neutral view on the stock.
Key highlights for the quarter: Britannia registered robust top-line growth of
18.2% yoy in 2QFY2012. The company continued its impressive top-line growth
because of new product launches, price hikes and improved product mix.
Britannia has been posting ~20% top-line growth consecutively for the past seven
quarters. During the quarter, Britannia’s operating margin expanded marginally
by 9bp yoy, despite higher staff costs and ad spends, as the company managed
its raw-material costs efficiently. Earnings for the quarter grew by 18.8% yoy.
Outlook and valuation: We expect Britannia to post a ~17% revenue CAGR
(largely volume growth) over FY2011–13E and model in margin expansion of
184bp, despite sustained higher ad spends, aided by a benign input cost
environment and higher operating leverage. Further, in terms of earnings, we
expect Britannia to post a robust ~36% CAGR. At the CMP, the stock is trading at
21.5x FY2013 EPS (in-line with its historical valuations); hence, we recommend
Neutral on the stock with a fair value `495, based on 22x FY2013E EPS.
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