Brokerage firm Edelweiss included Britannia as one of its top picks six weeks ago. Since then, the stock has gained 18 per cent and has outperformed the FMCG index by 600 basis points. Edelweiss says that even if there is a weakness in this stock on a quarterly basis in the financial year 2021-22, then investors should see it as an opportunity to add it to their portfolio.
The brokerage firm says that Britannia’s shares appear to be recovering amid increasing mobility and efforts by regional players to increase their stake. The company’s products are expanding in its market. Meanwhile, the price of its product has also increased. So far in the second half of the financial year 2021-22, the environment has been favorable for the company. Therefore, this stock is being given a rating of ‘BUY’ at a target price of Rs 4,670.
Why will Britannia shares rise? this is the reason
The possibility of a rise in the prices of Britannia shares is clearly visible. There are many reasons for this – the company’s WIN in Many India strategy is working. Its market share continues to rise. There is a lot of room for this in e-commerce. Due to increase in mobility, opening of malls, the demand for premium products of the company has increased. Along with this, the company is very innovative and its R&D strength is also high.
With increasing rural growth in most of the states, the demand for the company’s product seems to be increasing. The company has expanded its capacity in Maharashtra and Tamil Nadu and has commercialized partnerships for manufacturing in Egypt and Uganda. The company’s more balanced growth has balanced the price hike and the product mix. Britannia is a Nusli Wadia Group company and its Go Airlines IPO worth Rs 36 billion has been approved. In such a situation, strong growth can be seen in the shares of the company. However, there is some risk in front of the shares of the company. Like the increase in the prices of cashew and palm oil. The company’s base is very high in the second quarter, so it can see good growth in the second half itself.
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Britannia is the value leader in the biscuits category, retaining its market share. The company is strengthening its distribution network in the rural markets of its vulnerable states like Gujarat, Madhya Pradesh, Uttar Pradesh and Rajasthan. The company’s aggregate growth has increased due to increasing market share. The company is showing success in its efforts to reduce costs. Its target is to increase the share of cost control to 2.1 per cent of revenue every year. The company’s competitor Parle is also capturing the market share of other companies. But Edelweiss has rated the Britannia as ‘BUY’ with a target price of Rs 4670.
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