BRIT’s Q4 results are in line with Adj. PAT of Rs1.1bn (PLe: Rs1bn), even as sales
growth of 10% was lower then our estimates. Volume growth of 3% has been
disappointing, although wheat prices were up 8.8% YoY and Palmoil prices are up
23.3% YoY, neutralise to some extent by 8% lower sugar prices YoY, BRIT continued
to gain from strict cost control in a tough operating environment. Q4FY14 margin
expansion continued despite Q4FY13 being a high base quarter. We expect margins
expansion to moderate from the current levels, going forward. We estimate PAT
CAGR of 23% for FY14‐16.We value the stock at 23xMar 16 EPS and assign a value
of Rs50 per share to subsidiaries (0.6xEV/Sales) and arrive at target price of
Rs1,148. Maintain ‘BUY’.
EBITDA margin at 10%; Adj. PAT up 27%: BRIT reported 10% increase in sales to
Rs16.5bn; we estimate 3% (4.5% in Q3) volume growth, showing impact of
demand slowdown. Gross margins expanded 110bps to 38.5%. EBITDA margin
expanded by 120bps to 10% aided by 140bps decline in advertising expenses
even as staff cost and other expenses were up by 50bps each. EBITDA increased
25%; PBT increased by 25% to Rs1.59bn as gain of 96% decline in interest cost
was neutralised by 46% decline in other income. Adj. PAT was up by 27% to Rs
1.1bn as Tax rate declined by 120bps while PAT is up by 4% to Rs915m.
Demand slowdown impacts volume; selective price increase to cost pressure:
Volumes for BRIT remains impacted by demand slowdown, BRIT has effected
selective price increase in Milk Bikis, Nutrichoice Ragi and Oats as wheat and
milk prices were at an all‐time high in Q4, also palmoil prices and sugar prices
touched year high levels putting pressure on costs, however in Q1FY15 we have
seen prices of Wheat and palm oil correcting sharply, while milk and sugar have
retraced from their highs. While we expect competitive environment to sustain
due to pressure from players like Parle, ITC and UNIBIC to gain market share,
sustained margin expansion in standalone operations will continue led by gains
from improved sales mix, benefits of new manufacturing units, cost‐cutting in
distribution and marketing and help from correcting raw material prices.
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growth of 10% was lower then our estimates. Volume growth of 3% has been
disappointing, although wheat prices were up 8.8% YoY and Palmoil prices are up
23.3% YoY, neutralise to some extent by 8% lower sugar prices YoY, BRIT continued
to gain from strict cost control in a tough operating environment. Q4FY14 margin
expansion continued despite Q4FY13 being a high base quarter. We expect margins
expansion to moderate from the current levels, going forward. We estimate PAT
CAGR of 23% for FY14‐16.We value the stock at 23xMar 16 EPS and assign a value
of Rs50 per share to subsidiaries (0.6xEV/Sales) and arrive at target price of
Rs1,148. Maintain ‘BUY’.
EBITDA margin at 10%; Adj. PAT up 27%: BRIT reported 10% increase in sales to
Rs16.5bn; we estimate 3% (4.5% in Q3) volume growth, showing impact of
demand slowdown. Gross margins expanded 110bps to 38.5%. EBITDA margin
expanded by 120bps to 10% aided by 140bps decline in advertising expenses
even as staff cost and other expenses were up by 50bps each. EBITDA increased
25%; PBT increased by 25% to Rs1.59bn as gain of 96% decline in interest cost
was neutralised by 46% decline in other income. Adj. PAT was up by 27% to Rs
1.1bn as Tax rate declined by 120bps while PAT is up by 4% to Rs915m.
Demand slowdown impacts volume; selective price increase to cost pressure:
Volumes for BRIT remains impacted by demand slowdown, BRIT has effected
selective price increase in Milk Bikis, Nutrichoice Ragi and Oats as wheat and
milk prices were at an all‐time high in Q4, also palmoil prices and sugar prices
touched year high levels putting pressure on costs, however in Q1FY15 we have
seen prices of Wheat and palm oil correcting sharply, while milk and sugar have
retraced from their highs. While we expect competitive environment to sustain
due to pressure from players like Parle, ITC and UNIBIC to gain market share,
sustained margin expansion in standalone operations will continue led by gains
from improved sales mix, benefits of new manufacturing units, cost‐cutting in
distribution and marketing and help from correcting raw material prices.
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