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Another strong quarter; downgrade a notch to ADD due to sharp run-up. Britannia delivered another strong quarter of 9% ahead-of-market volume growth and 49% yoy growth in recurring PAT. While we remain positive on the company and model a strong 22% EPS growth over FY2015-17E led by 140 bps expansion in EBITDA to 12.2% (aided by RM tailwinds/premiumization), the recent sharp run-up forces us to downgrade our rating a notch to ADD from BUY. TP remains unchanged at `2,050.
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Another strong quarter overall Britannia reported another strong quarter overall – net operating revenues of `20.3 bn (+13% yoy; KIE: `20.3 bn), in line with our estimates. EBITDA grew at a strong 37% yoy to `2.2 bn (KIE: `2.3 bn), 6% below our estimates, due to lower-than-expected GM expansion (expanded 70 bps yoy). However, EBITDA margin expanded 190 bps yoy to 10.8% (down 40 bps qoq) aided by lower staff costs and conversion charges, which dipped 20 bps and 50 bps yoy respectively and 50 bps fall in A&SP (up 90 bps qoq to support new launches). Recurring PAT came in at `1.5 bn (+49% yoy; KIE: `1.51 bn), in line with our estimates despite a miss in EBITDA, due to lower tax rate (down 180 bps yoy). Reported PAT grew 37% yoy to `1.37 bn due to exceptional expense of `121 mn on account of VRS payment. We note standalone EBITDA margin expanded by 140 bps yoy to 10.5% and subsidiary business EBITDA margins expanded for the second consecutive quarter by a sharp 720 bps yoy to 14% led by 490 bps GM expansion (lower milk, milk powder prices). Volume growth acceleration impressive; management commentary remains upbeat Domestic business growth was driven by a strong 9% volume growth. Revenue growth acceleration was impressive against the backdrop of a still-challenging demand environment. Management commentary remains strong and upbeat; key highlights – (1) Britannia continues to improve market share through strong innovation, strengthening its go-to-market (GTM) strategy and focused investment behind brands, (2) while premiumization is a strong focus area, Britannia will invest in improving its market share in value offerings as well (current share at 9%; target is to take it up to 15%) and (3) while bakery remains the core near-term focus, the company is working on a new strategy plan (will finalize over the next 3-6 months) to evaluate existing (dairy/international) and new business opportunities. Broadly retain estimates; sharp run-up drives a downgrade to ADD (from BUY) We continue to like Britannia’s narrative – renewed management vigor, strong earnings delivery and play on a good category (bakery). Our FY2016/17E estimates are broadly unchanged; however, sharp run-up over the past few months forces us to downgrade our rating on the stock a notch to ADD from BUY. Target price remains unchanged at `2,050
LINK
http://www.kotaksecurities.com/pdf/indiadaily/indiadaily05022015pu.pdf
Another strong quarter; downgrade a notch to ADD due to sharp run-up. Britannia delivered another strong quarter of 9% ahead-of-market volume growth and 49% yoy growth in recurring PAT. While we remain positive on the company and model a strong 22% EPS growth over FY2015-17E led by 140 bps expansion in EBITDA to 12.2% (aided by RM tailwinds/premiumization), the recent sharp run-up forces us to downgrade our rating a notch to ADD from BUY. TP remains unchanged at `2,050.
�� India Equity Research Reports, IPO and Stock News Visit http://indiaer.blogspot.com/ for complete details ��
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Another strong quarter overall Britannia reported another strong quarter overall – net operating revenues of `20.3 bn (+13% yoy; KIE: `20.3 bn), in line with our estimates. EBITDA grew at a strong 37% yoy to `2.2 bn (KIE: `2.3 bn), 6% below our estimates, due to lower-than-expected GM expansion (expanded 70 bps yoy). However, EBITDA margin expanded 190 bps yoy to 10.8% (down 40 bps qoq) aided by lower staff costs and conversion charges, which dipped 20 bps and 50 bps yoy respectively and 50 bps fall in A&SP (up 90 bps qoq to support new launches). Recurring PAT came in at `1.5 bn (+49% yoy; KIE: `1.51 bn), in line with our estimates despite a miss in EBITDA, due to lower tax rate (down 180 bps yoy). Reported PAT grew 37% yoy to `1.37 bn due to exceptional expense of `121 mn on account of VRS payment. We note standalone EBITDA margin expanded by 140 bps yoy to 10.5% and subsidiary business EBITDA margins expanded for the second consecutive quarter by a sharp 720 bps yoy to 14% led by 490 bps GM expansion (lower milk, milk powder prices). Volume growth acceleration impressive; management commentary remains upbeat Domestic business growth was driven by a strong 9% volume growth. Revenue growth acceleration was impressive against the backdrop of a still-challenging demand environment. Management commentary remains strong and upbeat; key highlights – (1) Britannia continues to improve market share through strong innovation, strengthening its go-to-market (GTM) strategy and focused investment behind brands, (2) while premiumization is a strong focus area, Britannia will invest in improving its market share in value offerings as well (current share at 9%; target is to take it up to 15%) and (3) while bakery remains the core near-term focus, the company is working on a new strategy plan (will finalize over the next 3-6 months) to evaluate existing (dairy/international) and new business opportunities. Broadly retain estimates; sharp run-up drives a downgrade to ADD (from BUY) We continue to like Britannia’s narrative – renewed management vigor, strong earnings delivery and play on a good category (bakery). Our FY2016/17E estimates are broadly unchanged; however, sharp run-up over the past few months forces us to downgrade our rating on the stock a notch to ADD from BUY. Target price remains unchanged at `2,050
LINK
http://www.kotaksecurities.com/pdf/indiadaily/indiadaily05022015pu.pdf
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