The FY22 annual report of Britannia (BRIT) particulars a number of initiatives that resulted in sharp good points in its market share and furthered its transition in direction of a complete meals firm. We spotlight a number of: i) Aiming for management place in wafers and croissants. ii) Evaluating partnerships in dairy with QSRs in FY23. ii) To incubate ‘fresh business’ by launch of paneer, Greek yogurt and smoothies. iv) Disproportionate concentrate on e-commerce (grew 100% y-o-y), and an app launched for its distributors (an industry-first).
Retain ‘Buy’ with a TP of Rs 4,415, baking in BRIT’s market share good points and increasing addressable markets, to not point out calibrated worth hikes (10% in FY22; 7%-plus extra seemingly in our view).
Key new learnings
Power manufacturers embody: Rs 40-bn membership – Good Day and Marie Gold; and Rs 10-bn membership – Milk Bikis, Nutrichoice, Tiger and 50-50.
Star performers for the yr embody Tiger Krunch (grew 35% y-o-y), Winkin Cows (entered Rs 1 bn-plus), and Milk Bikis Atta Biscuit (doubled in two years).
Evaluating partnerships in Dairy with QSRs and eating places in FY23 will result in good progress in adjacencies, other than plans to incubate ‘fresh business’ by launch of paneer, Greek yogurt and smoothies below the ‘Come Alive’ model. Britannia is striving to achieve management place in wafers and croissants.
New additions reminiscent of croissants, Good Day (hazelnut, cashew and pistachio), Potazos and Biscafe are doing properly.
In order to realize management in more healthy/value-added portfolio in breads, BRIT launched many new merchandise in FY22.
Salted snacks is a class of great curiosity for Britannia, notably in more healthy codecs.
Outlook: Improving prospects; preserve ‘BUY’
Britannia is the worth chief within the biscuit class (forward of Parle) and has sustained good market share good points. We imagine the corporate’s progress will proceed to outstrip the {industry}. Its deepening distribution community, notably in rural, with concentrate on driving progress within the states it has a weak standing in – Gujarat, Madhya Pradesh, Uttar Pradesh and Rajasthan – would maintain it in good stead. BRIT’s cost-saving initiatives proceed to be strong, however margins within the close to time period are more likely to stay below stress on account of sharp inflation.
Key dangers: inflation in wheat and palm oil (although down 20% from peak, however nonetheless up y-o-y). Even so, a gradual enchancment within the product combine would help gross and EBITDA margins. We preserve ‘BUY/SO’ with a goal worth of Rs 4,415.
Source: www.financialexpress.com”