Britannia Industries: Several catalysts in place; amongst our top ideas

Britannia Industries

BSE SENSEX

23,779

S&P CNX

7,222

1 March 2016

Update

| Sector:

Consumer

CMP: INR2,840

Premium cookie

TP: INR3,500 (+23%)

Buy

Several catalysts in place; amongst our top ideas



Stock Info

Bloomberg

Equity Shares (m)

52-Week Range (INR)

1, 6, 12 Rel. Per (%)

M.Cap. (INR b)

M.Cap. (USD b)

Avg Val ( INR m)

Free float (%)

BRIT IN

120.0

3,435/2,009

10/2/53

340.8

5.0

575

49.3



Financials Snapshot (INR b)

Y/E Mar

2016E 2017E

Sales

87.0 100.3

EBITDA

12.0

14.4

Adj. PAT

8.6

10.2

Adj.EPS(INR)

71.7

85.2

EPS Gr. (%)

49.8

18.9

BV/Sh.(INR)

144.7 195.3

RoE (%)

57.8

50.2

RoCE (%)

65.0

58.8

P/E (x)

39.6

33.3

P/BV (x)

19.6

14.5

Shareholding pattern (%)

As On

Promoter

DII

FII

Others

Premiumization-led opportunity continues to drive medium to long-term healthy

earnings visibility for BRIT. Its new launch activity in the premium portfolio is

consistent and yielding good dividends.

Distribution and portfolio expansion in central states are white spaces which should

drive near-term volume growth.

Managing Director, Mr Varun Berry’s vision of making BRIT a ‘Total Foods Company’

provides multiple growth drivers for portfolio expansion.

Recent hardening of commodity (sugar) prices has concerned investors. However,

RM inflation for the basket is ~4% and ample room for price hike exists.

The stock has corrected 20% from its recent peak. Our conviction in BRIT remains

intact and it is one of our top four ideas in the Consumer space. Buy.

2018E

116.4



16.5

11.7

97.2

14.0

252.9

43.4

52.1

29.2

11.2

Dec-15 Sep-15 Dec-14

50.7

27.8

0.0

21.4

50.7

8.8

19.8

20.6

50.8

9.3

19.5

20.5

FII Includes depository receipts

Stock Performance (1-year)

Britannia Inds.

Sensex - Rebased

3,800

3,200

2,600

2,000

1,400

Premiumization driving growth for industry and Britannia:

Premiumization in

the Biscuits industry continues at a healthy pace and is driving growth for the

industry in general and BRIT in particular. The Glucose segment (mass/value)

has declined 0.3% while the Cookies segment (BRIT’s forte) has delivered 15%

CAGR over two years. BRIT’s launch activity in the premium space has been

robust – it recently launched

Pure Magic Deuce

(blend of chocolate and

biscuit). In the last 18 months, it has introduced three key products at the

premium end –

Nutrichoice Heavens, Good Day Chunkies

and

Pure Magic

Chocolush.

It has also revamped existing power brands –

Good Day, Bourbon

while

Tiger

re-launch is underway. We expect BRIT to continue to drive its

premium portfolio in urban and tier-I markets even as it uses its value

offerings to make inroads in hitherto weaker geographies (central states).



Distribution expansion to augment volumes:

BRIT has doubled its direct

outlet reach to 1.25m outlets in three years (added 0.19m outlets in 9MFY16).

Its total reach stands at 3.6m outlets compared to Parle’s 6m outlets (the

category is present in 6.7m outlets). It had also started split route model of

distribution, where two salesmen cater to a retailer, selling split sections of

the portfolio. Given the success of the split route strategy, BRIT is expanding

this strategy to more markets. Distribution still offers a significant opportunity

for BRIT; we expect 10% per annum growth in its direct reach for the next 3-5

years. Distribution expansion has been one of the drivers for BRIT’s sustained

outperformance over the last 2-3 years. Against BRIT’s 12% revenue CAGR

over FY13-16E, the industry has grown at low-to-mid-single digits.



Market share and distribution white spaces in Central India:

Notwithstanding

its number-1 market position in the value ladder of the Biscuits industry, BRIT

remains weak in Central India (Hindi belt) due to legacy reasons. Its market

share in the Hindi belt is just 11% against all-India value market share of 33%.

Gautam Duggad

(Gautam.Duggad@MotilalOswal.com); +91 22 3982 5404

Vishal Punmiya

(Vishal.Punmiya@MotilalOswal.com); +91 22 3980 4261

Investors are advised to refer through important disclosures made at the last page of the Research Report.

Motilal Oswal research is available on www.motilaloswal.com/Institutional-Equities, Bloomberg, Thomson Reuters, Factset and S&P Capital.

Britannia Industries

This region continues to offer opportunity for BRIT to gain market share and

distribution. BRIT is correcting the gaps in these markets, and leveraging its low

unit packs (LUP) portfolio and glucose portfolio to make inroads in these

markets. BRIT’s rural market share is 2/3

of its urban market share. While we

wouldn’t read much into the quarterly growth rates, the results of the efforts

are reflecting in the 35% rural sales growth BRIT delivered in 3QFY16 in an

otherwise stagnant rural demand environment. Our conversations with the

distributors and trade supply chain in Central India suggest continued strong

traction for BRIT even in 4QFY16. It overtook Parle as the number-1 player in

value terms a couple of quarters ago, though the gap between the two remains

thin at 100bp, with BRIT holding 33% share. Volume-wise, Parle holds sway,

with its tonnage being 1.5x BRIT’s.



Best of RM tailwind behind, but BRIT not a RM softening story:

While BRIT has

benefited from tailwinds in its key RMs – wheat, edible oils, sugar and packaging

material, we believe and have consistently highlighted in our earlier reports that

BRIT is not merely a play on RM cycle. Revisiting our arguments:

•

We believe consistent premiumization in the Biscuits industry has accorded

better pricing power to BRIT and other industry players versus earlier

commodity cycles. The ability to pass on RM inflation is much higher today.

•

Competitive intensity is steady and not as detrimental as it was during 2003-

10, when ITC was ramping up its Biscuits portfolio. Today, ITC enjoys 12-13%

market share and has broken even in this segment in FY10. Parle has also

started focusing on its Premium portfolio (the Glucose segment is declining

at industry level). With the top three players focusing on the Premium

segment, pricing discipline has largely been maintained. Even in the recent

deflation cycle of CY14 and CY15, we have not seen internecine price wars in

the Biscuits industry.

In our view, the recent hardening of sugar prices is not a cause for concern –

BRIT’s RM basket has seen ~4% inflation, which can easily be passed on, as BRIT

has not taken any meaningful price hikes in the last two years. We expect it to

reduce promotional spends before resorting to MRP increases.



One of our top ideas; reiterate Buy:

BRIT offers good earnings visibility,

underpinned by (a) continued premiumization, (b) distribution and market share

white spaces in Central India, and (c) long-term ambition of transforming from a

Biscuits player to a ‘Total Foods’ player. Consistent double-digit volume growth

in a subdued demand environment and market share gains highlight the strong

market positioning of BRIT. We note that turnaround in BRIT’s financials (and

margins, in particular) has been sharp post Mr Berry’s arrival, and to that extent,

higher base could present a challenge for near-term growth. We estimate 16.4%

EPS CAGR over FY16-18 on the back of 44% EPS CAGR over FY12-16. However,

optical illusions apart, we believe BRIT presents a good medium to long term

play, as it consolidates its leadership position in the premiumizing Biscuits

industry and unleashes the non-biscuits portfolio over the next three years. We

reiterate

Buy.

1 March 2016

Britannia Industries

Biscuits industry premiumization firmly in place

Top three players driving premiumization together

Britannia benefiting disproportionately; execution excellence at the fore

Premiumization in the Biscuits industry is an old story. However, what is

relevant is the consistency of this trend, even in a subdued demand

environment. The mass and value-oriented Glucose category has declined at a

compounded annual rate of 0.3% over two years, with its value contribution

declining from 30% a few years ago to ~16%. Cookies and Cream Biscuits have

grown at 14.9% and 3.5%, respectively over two years, with a combined value

contribution of ~48% of the Biscuits category. This has forced players like Parle

(enjoys unreachable moat in the Glucose segment with its brand synonymous

with the category) to now focus on premiumization.



The Value segment, which constitutes ~45% of the market, has been a major

contributor to the INR260b Biscuits market. Parle derives ~80% of its sales from

the Value segment compared with just ~15% for BRIT. BRIT’s market share in the

category is just 1/5

of Parle’s.



The price differential between the Premium and Glucose segments is significant.

While a 100gm pack of

Good Day Chunkies

is available at an MRP of INR50, a

124gm pack of

Tiger Glucose

is priced at INR10.



Combined efforts and investments of the top three Biscuits incumbents – BRIT,

Parle and ITC – should help sustain the underlying premiumization trend.



Exhibit 1: Glucose category has de-grown in the last two years

Category

Source: Company, MOSL

Market share and distribution white spaces in Central India

Notwithstanding its number-1 market position in the value ladder of the Biscuits

industry, BRIT remains weak in Central India (Hindi belt) due to legacy reasons.

Its market share in the Hindi belt is just 11% against all-India value market share

of 33%. This region continues to offer opportunity for BRIT to gain market share

and distribution. It is correcting the gaps in these markets and leveraging its low

unit packs (LUP) and Glucose portfolios to make inroads in these markets.



BRIT’s rural market share is 2/3 of its urban market share. While we wouldn’t

read much into the quarterly growth rates, the results of its efforts are reflecting

in the 35% rural sales growth BRIT delivered in 3QFY16 in an otherwise stagnant

rural demand environment. Our conversations with distributors and the trade

supply chain in Central India suggest continued strong traction for BRIT even in

4QFY16. It overtook Parle as the number-1 player in value terms a couple of

quarters ago, though the gap between the two remains thin at 100bp, with BRIT

holding 33% share. Volume-wise, Parle holds sway, with its tonnage 1.5x BRIT’s.



We expect the gap to narrow, as BRIT augments its presence in hitherto weak

areas. We would keenly watch the second order benefits of distribution

expansion in these markets – whether BRIT is able to build the presence of its

premium portfolio in these markets once the first round of portfolio (LUP, value

products) is placed. Towards this, we draw the attention of investors to Dabur,

which implemented Project Double in Rural India in FY13 – it doubled rural

coverage in identified top-10 states and subsequently benefited by playing even

the Premium portfolio over a period of time.



1 March 2016

Britannia Industries

Best of RM tailwind behind, but BRIT not a RM softening story

Due to benign input prices, mix enrichment and efficiencies of operations; BRIT’s

gross margin had expanded 780bps over FY12-9MFY16 to 42.1%. While BRIT has

benefited from tailwinds in its key RMs – wheat, edible oils, sugar and packaging

material, we believe and have consistently highlighted in our earlier reports that

BRIT is not merely a play on RM cycle. Revisiting our arguments:

•

We believe consistent premiumization in the Biscuits industry has accorded

better pricing power to BRIT and other industry players versus earlier

commodity cycles. The ability to pass on RM inflation is much higher today.

•

Competitive intensity is steady and not as detrimental as it was during 2003-

10, when ITC was ramping up its Biscuits portfolio. Today, ITC enjoys 12-13%

market share and has broken even in this segment in FY10. Parle has also

started focusing on its Premium portfolio (the Glucose segment is declining

at industry level). With the top three players focusing on the Premium

segment, pricing discipline has largely been maintained. Even in the recent

deflation cycle of CY14 and CY15, we have not seen internecine price wars in

the Biscuits industry.



In our view, the recent hardening of sugar prices is not a cause for concern –

BRIT’s RM basket has seen ~4% inflation, which can easily be passed on, as BRIT

has not taken any meaningful price hikes in the last two years. We expect it to

reduce promotional spends before resorting to MRP increases.



Exhibit 11: Gross margin has expanded 780bps over FY12-9MFY16 to 42.1%.

Gross Margin (%)

42.5

39.7

42.9

39.0

35.8

38.1

36.1

34.0

35.3

38.9

37.1

FY07

FY08

FY09

FY10

FY11

FY12

FY13

FY14

FY15

FY16E FY17E FY18E

Source: Company, MOSL

1 March 2016

Britannia Industries

Exhibit 12: Consolidated raw material break-up

Y/E March (INR m)

Net Revenues

Change (%)

Consumption Of RM

Flour

Fats and Oils

Sugar

Lamination roll

Others

Consol RM-Stdl RM

Change (%)

Consumption Of RM

Flour

Fats and Oils

Sugar

Lamination roll

Others

Consol RM-Stdl RM

As a % of RM consumption

Consumption Of RM

Flour

Fats and Oils

Sugar

Lamination roll

Others

Consol RM-Stdl RM

As a % of total revenues

Consumption Of RM

Flour

Fats and Oils

Sugar

Lamination roll

Others

Consol RM-Stdl RM

FY07

100

FY07

22,663

32.3

13,624

4,056

2,870

2,035

1,444

3,119

FY07

FY08

27,763

22.5

15,511

4,577

2,931

1,688

1,554

4,038

724

FY08

13.9

12.9

2.1

-17.1

7.6

29.5

627.5

FY08

100

FY08

FY09

34,212

23.2

19,290

5,262

3,288

2,078

1,754

5,288

1,619

FY09

24.4

15.0

12.2

23.1

12.9

31.0

123.7

FY09

100

FY09

FY10

37,729

10.3

20,245

5,633

2,931

3,184

1,590

5,381

1,527

FY10

5.0

7.1

-10.9

53.2

-9.4

1.7

-5.7

FY10

100

FY10

FY11

45,897

21.6

27,144

6,350

3,636

4,523

2,127

7,083

3,425

FY11

34.1

12.7

24.1

42.1

33.8

31.6

124.3

FY11

100

FY11

FY12

54,608

19.0

31,091

6,383

4,716

3,978

2,430

9,043

4,541

FY12

14.5

0.5

29.7

-12.1

14.2

27.7

32.6

FY12

100

FY12

FY13

61,359

12.4

33,505

7,870

4,921

4,655

2,643

8,816

4,601

FY13

7.8

23.3

4.3

17.0

8.8

-2.5

1.3

FY13

100

FY13

FY14

68,293

11.3

36,574

9,069

4,838

4,589

2,993

10,166

4,919

FY14

9.2

15.2

-1.7

-1.4

13.2

15.3

6.9

FY14

100

FY14

FY15

77,751

13.8

41,200

9,785

5,395

4,662

610

15,478

5,270

FY15

12.6

7.9

11.5

1.6

-79.6

52.3

7.1

FY15

100

FY15

Note: Consumption of raw material excludes purchase of finished goods and change in stock

Source: Company, MOSL

Exhibit 13: Wheat flour index up 4% sequentially

210

190

170

150

130

India Wholesale Price Index Wheat Flour

Exhibit 14: Sugar index up 5% sequentially

240

210

180

150

120

India Wholesale Price Index Sugar

Source: Company, MOSL

1 March 2016

Britannia Industries

Exhibit 15: Cashew index up 7% sequentially

India Wholesale Price Index Cashew Nut

270

220

170

120

Exhibit 16: SMP prices down 3% sequentially

150

120

SMP Prices (INR/Kg)

Source: Company, MOSL

Driving Non-Biscuits portfolio; aims to be ‘Total Foods’ player



While Biscuits still form the bulk of (3/4

of revenues) BRIT’s revenues, the

management believes the Non-Biscuits portfolio has not been leveraged and

offers significant opportunity to drive medium to long term growth.



BRIT’s strategy is to build a future that is beyond Biscuits and to become a ‘Total

Foods Company’. In our interactions, Mr Berry has highlighted his agenda of

taking BRIT from the ‘periphery of the plate’ to ‘center of the plate’. In the Non-

Biscuits portfolio, it aims to focus on the following:

•

Dairy:

Currently, Dairy constitutes just 5% of BRIT’s portfolio (cheese

forming bulk of the sales) and the company is currently awaiting board

approval for the clearance of dairy project to expand its operations in the

INR850b organized dairy industry. It aims to have a fully integrated supply

chain for dairy products. BRIT has roped in Mr Sarad Garodia from Schreiber

Dynamix to head its Dairy business operations.

•

Cakes and Rusk:

The market is nascent but has huge potential, with only

Parle as the other organized player. We note that BRIT has a first mover

advantage in the category and has recently roped in a separate business

manager for the Cakes and Rusk segment.

•

Macro Snacking, Chocolates and Breakfast:

BRIT is also evaluating and

looking to enter the Macro Snacking, Chocolates and Breakfast category in

next six months. It recently launched

Pure Magic Deuce,

an innovative

product aimed at bridging the gap between biscuits and chocolates.

Exhibit 17: Pure Magic Deuce – aimed to bridge gap between

biscuits and chocolates

Exhibit 18: Current dairy offerings by Britannia

Source: Company, MOSL

1 March 2016

Britannia Industries

International business: Focusing on markets where Indian diaspora is

relevant



International business is still very small for BRIT at 6% of overall revenues.

According to the management, it has been doing well and has been accretive to

overall business. In the international market, BRIT sells biscuits, rolls, rusks and

wafers under the

Nutro

and

Britannia

brands and has begun exporting Ghee.

BRIT distributes products in ~75 countries, with the Middle East accounting for

majority of its sales. The Indian diaspora of 26m people across various countries

has helped BRIT to grow its international business. It hopes to increase its

international business revenues by improving manufacturing capacities,

boosting exports and is also open to making acquisitions or entering into JVs. It

is looking to set up a facility in Gujarat to boost international sales to 1/5

overall revenues by 2021. We note that earlier, BRIT had one team handling

operations for the Middle East and another for the rest of the world; it has now

changed the operating structure and created separate teams for different

geographies, which should help identify 2-3 key markets where BRIT could foray.

Exhibit 19: Subsidiaries, SEZ and JVs in key markets

Source: Company, MOSL

Several capacity expansion projects lined up over next 2-3 years



Over the next two years, BRIT would be investing ~INR9b to set up fresh

manufacturing facilities in Assam (Guwahati), Andhra Pradesh and Maharashtra,

besides new plants in Tamil Nadu and Karnataka. For exports, it is looking to set

up a facility in Gujarat to boost its international sales to one-fifth of revenues by

2021 (6% currently). Along with new capacities, it is also looking to add lines in

existing plants. This would be BRIT’s biggest single tranche of investments in a

time frame of two years. We note that BRIT has around 80 manufacturing units

(including 40 biscuit units) across India, which produce 28m packs per day. This

shows the scale of opportunities available across BRIT’s segments.

1 March 2016

Britannia Industries

Exhibit 20: Britannia has 80+ manufacturing units across India

1 March 2016

Britannia Industries

Operating metrics

Exhibit 21: Consolidated margin break-up for Britannia

Margin break-up

Gross Margins

EBITDA

PAT

Manufacturing expenses

Consumption of stores & spares

Heat light and power

Plant and machinery

Others

Conversion Cost

Employee costs

Other expenses

Rates and taxes

Freight

SGA Overheads

Advertising

FY06

41.3%

11.7%

8.5%

9.8%

0.2%

1.3%

0.4%

0.0%

7.8%

4.3%

7.4%

1.2%

6.0%

2.0%

6.3%

FY07

35.8%

5.8%

5.0%

9.7%

0.2%

1.1%

0.3%

0.0%

8.0%

3.5%

7.9%

0.4%

7.4%

2.8%

6.1%

FY08

39.0%

8.5%

6.1%

8.6%

0.2%

1.5%

0.5%

0.0%

6.4%

4.5%

7.4%

0.5%

6.8%

3.3%

6.6%

FY09

38.1%

7.0%

3.7%

9.0%

0.3%

1.5%

0.6%

0.0%

6.6%

4.6%

7.7%

0.6%

6.9%

2.8%

6.9%

FY10

36.1%

4.3%

3.5%

8.7%

0.3%

1.2%

0.3%

6.6%

4.4%

8.0%

0.7%

6.7%

2.8%

8.0%

FY11

34.0%

4.7%

2.9%

8.2%

0.2%

1.2%

0.2%

6.3%

3.9%

7.2%

0.5%

6.6%

2.8%

7.3%

FY12

35.3%

5.2%

3.7%

8.5%

0.2%

1.3%

0.2%

6.5%

3.9%

6.7%

0.5%

6.1%

3.3%

7.7%

FY13

37.1%

6.0%

4.2%

9.1%

0.2%

1.5%

0.2%

0.3%

6.8%

3.7%

6.3%

0.3%

5.7%

3.2%

8.7%

FY14

FY15 9MFY16

38.9% 39.7%

42.1%

8.0% 10.0%

13.8%

5.8%

7.4%

9.7%

9.1%

8.6%

0.3%

1.6%

1.4%

0.2%

0.3%

6.6%

6.3%

5.7%

3.8%

3.6%

3.9%

6.2%

6.0%

0.4%

5.7%

5.5%

2.9%

3.0%

8.8%

8.4%

8.2%

Source: Company, MOSL

Exhibit 22: Standalone margin break-up for Britannia

Margin break-up

Gross Margins

EBITDA

PAT

Manufacturing expenses

Consumption of stores & spares

Heat light and power

Plant and machinery

Others

Conversion Cost

Employee costs

Other expenses

Rates and taxes

Freight

SGA Overheads

Advertising

FY06

41.3%

11.7%

8.5%

9.8%

0.2%

1.3%

0.4%

0.0%

7.8%

4.3%

7.4%

1.2%

6.0%

2.0%

6.3%

FY07

36.3%

5.8%

5.2%

10.0%

0.3%

1.1%

0.3%

0.0%

8.2%

3.5%

8.6%

0.9%

7.6%

2.3%

6.2%

FY08

39.8%

8.9%

7.1%

10.0%

0.2%

0.9%

0.5%

0.0%

8.3%

3.5%

7.8%

0.6%

7.1%

2.7%

7.0%

FY09

38.6%

8.4%

6.5%

10.0%

0.2%

0.7%

0.5%

0.0%

8.6%

3.1%

7.9%

0.7%

7.2%

2.4%

6.8%

FY10

36.4%

5.0%

4.3%

9.9%

0.2%

0.7%

0.2%

0.3%

8.5%

2.9%

8.3%

0.7%

7.1%

2.5%

7.9%

FY11

34.6%

5.6%

3.1%

9.2%

0.2%

0.7%

0.2%

0.3%

7.9%

2.8%

7.3%

0.4%

6.8%

2.4%

7.2%

FY12

35.7%

5.1%

3.8%

9.9%

0.2%

0.8%

0.2%

0.3%

8.4%

2.9%

6.9%

0.4%

6.4%

3.2%

7.7%

FY13

36.8%

5.8%

4.2%

10.5%

0.2%

0.9%

0.2%

0.3%

8.8%

2.6%

6.5%

0.3%

6.0%

3.1%

8.3%

FY14

38.9%

8.4%

6.3%

10.4%

0.2%

1.0%

0.2%

0.3%

8.7%

2.8%

6.4%

0.3%

6.0%

2.8%

8.1%

FY15 9MFY16

39.2%

9.8%

6.8%

10.1%

0.2%

0.9%

0.1%

0.3%

8.5%

2.5%

6.2%

0.3%

5.8%

2.8%

7.8%

41.5%

13.8%

9.7%

7.8%

2.7%

7.6%

Source: Company, MOSL

1 March 2016

Britannia Industries

Story in Charts

Exhibit 23:

BRIT posted healthy 14% revenue growth in FY15;

estimate 14.4% revenue CAGR over FY15-18

23.2

Revenues (INR b)

21.6

19.0

12.4 11.3

13.8

11.8

Revenue growth (%)

Exhibit 24:

Robust gross margin expansion over FY12-16E

Gross Margin (%)

42.5 42.9 42.9

15.3 16.1

38.1

36.1

34.0

35.3

38.9

37.1

39.7

10.3

FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16E FY17E FY18E

Source: Company, MOSL

FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16E FY17E FY18E

Source: Company, MOSL

Exhibit 25:

Focused brand investments behind five power brands

Ad spends (%)

8.7

8.0

6.6

6.9

7.3

7.7

8.8

8.4

Exhibit 26:

EBITDA margins expected to touch 14% in FY17

EBITDA Margin (%)

13.8

14.3 14.1

10.0

7.0

4.3

4.7

5.2

8.0

6.0

6.3

6.1

FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15

Source: Company, MOSL

FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16E FY17E FY18E

Source: Company, MOSL

Exhibit 27:

Expect PAT CAGR of 44% over FY12-16

PAT (INR b)

48.8

30.1

6.9

(25.9)

1.3

0.3

52.3

PAT growth (%)

45.1

49.8

Exhibit 28:

Stable return ratios

RoE (%)

54.3 54.1

44.1

18.9 14.0

29.3

20.1

26.7

17.7

26.7

58.9

56.4

1.3

2.0

2.6

4.0

5.7

8.6

10.2 11.7

FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16E FY17E FY18E

Source: Company, MOSL

FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15

Source: Company, MOSL

1 March 2016

Britannia Industries

Financials and Valuations

Income Statement

Y/E Mar

Net Sales

Change (%)

EBITDA

EBITDA Margin (%)

Depreciation

EBIT

Interest

Other Income

Extraordinary items

PBT

Tax

Tax Rate (%)

Min. Int. & Assoc. Share

Reported PAT

Adjusted PAT

Change (%)

2011

45,897

21.6

2,170

4.7

649

1,521

436

787

1,871

529

28.3

-1

1,343

1,342

0.3

2012

54,608

19.0

2,863

5.2

618

2,244

416

838

2,666

669

25.1

1,996

1,997

48.8

2013

61,359

12.4

3,711

6.0

732

2,980

413

1,017

3,584

986

27.5

2,595

2,599

30.1

2014

68,293

11.3

5,438

8.0

832

4,606

1,170

5,693

1,736

30.5

3,953

3,957

52.3

2015

77,751

13.8

7,806

10.0

1,445

6,361

1,713

1,142

9,177

2,293

25.0

6,886

5,743

45.1

2016E

86,954

11.8

11,964

13.8

1,314

10,650

1,862

12,468

3,865

31.0

8,603

49.8

2017E

100,272

15.3

14,385

14.3

1,525

12,860

2,004

14,820

4,594

31.0

10,226

18.9

(INR Million)

2018E

116,401

16.1

16,468

14.1

1,685

14,782

2,160

16,898

5,238

31.0

11,660

14.0

Balance Sheet

Y/E Mar

Share Capital

Reserves

Net Worth

Debt

Deferred Tax

Total Capital Employed

Gross Fixed Assets

Less: Acc Depreciation

Net Fixed Assets

Capital WIP

Investments

Current Assets

Inventory

Debtors

Cash & Bank

Loans & Adv, Others

Curr Liabs & Provns

Curr. Liabilities

Provisions

Net Current Assets

Total Assets

2011

239

3,021

3,260

6,188

9,527

9,691

5,498

4,193

128

3,885

7,126

3,470

810

769

2,078

6,661

5,381

1,280

465

9,527

2012

239

3,853

4,092

6,042

10,232

11,211

5,912

5,300

1,113

2,485

8,579

4,318

1,130

613

2,518

8,189

6,619

1,570

390

10,232

2013

239

5,340

5,579

3,800

128

9,529

12,893

6,517

6,376

1,473

1,082

8,912

3,747

1,228

1,029

2,908

9,306

7,657

1,649

-394

9,529

2014

240

7,741

7,981

1,498

9,591

14,930

7,524

7,406

1,071

1,979

9,543

4,203

1,087

1,091

3,163

11,477

9,366

2,111

-1,934

9,591

2015

240

12,211

12,451

1,451

-234

13,693

16,065

8,731

7,334

484

5,179

13,596

4,040

1,358

2,263

5,934

14,007

11,307

2,700

-411

13,693

2016E

240

17,116

17,356

1,499

-234

18,621

18,065

10,045

8,020

484

8,554

16,497

5,217

1,528

3,697

6,055

16,041

11,769

4,272

456

18,621

(INR Million)

2017E

240

23,182

23,422

1,499

-234

24,688

20,065

11,570

8,495

484

12,054

20,404

6,217

1,776

6,042

6,370

17,855

12,777

5,078

2,549

24,688

2018E

240

30,100

30,340

1,499

-234

31,605

22,065

13,255

8,810

484

15,554

25,412

7,217

2,093

9,402

6,700

19,761

13,971

5,790

5,651

31,605

1 March 2016

Britannia Industries

Financials and Valuations

Ratios

Y/E Mar

Basic (INR)

EPS

Cash EPS

Book Value

DPS

Payout (incl. Div. Tax.)

Valuation(x)

P/E

Cash P/E

Price / Book Value

EV/Sales

EV/EBITDA

Dividend Yield (%)

Profitability Ratios (%)

RoE

RoCE

Turnover Ratios (%)

Asset Turnover (x)

Debtors (No. of Days)

Inventory (No. of Days)

Creditors (No. of Days)

Leverage Ratios (%)

Net Debt/Equity (x)

1.7

2011

2,170

-122

475

-409

436

2,550

-470

2,081

-221

-690

-381

-1,137

-1,519

341

427

769

1.3

2012

2,863

-163

-81

-650

416

2,385

-2,505

-120

1,400

-1,105

-146

-1,289

-1,436

-155

769

613

0.5

2013

3,711

1,200

-934

413

4,481

-2,042

2,439

1,403

-639

-2,242

-1,184

-3,426

416

613

1,029

0.1

2014

5,438

751

1,602

-1,775

6,099

-1,634

4,465

-897

-2,531

-2,302

-1,204

-3,506

1,029

1,091

-0.1

2015

7,806

795

-350

-2,553

5,736

-548

5,188

-3,201

-1,142

-4,891

-47

374

327

1,172

1,091

2,263

-0.1

2016E

11,964

828

566

-3,865

9,538

-2,000

7,538

-3,375

-5,375

-2,777

-2,729

1,434

2,263

3,697

-0.2

2017E

14,385

871

252

-4,594

10,958

-2,000

8,958

-3,500

-5,500

-3,114

2,344

3,697

6,041

-0.3

2018E

16,468

919

258

-5,238

12,450

-2,000

10,450

-3,500

-5,500

-3,590

3,360

6,042

9,402

4.8

5.4

6.5

7.2

5.6

4.6

4.0

3.7

44.1

16.1

54.3

22.9

54.1

30.5

58.9

48.7

56.4

54.3

57.8

65.0

50.2

58.8

43.4

52.1

86.1

71.2

42.9

5.0

62.4

0.4

59.3

40.9

27.4

4.3

42.9

0.6

39.6

34.4

19.6

3.8

27.6

0.9

33.3

29.0

14.5

3.2

22.5

1.1

29.2

25.5

11.2

2.7

19.3

1.2

11.2

16.7

27.3

6.5

57.9

16.7

21.9

34.3

8.5

50.8

21.7

27.8

46.1

8.5

39.1

33.0

39.9

66.2

12.0

36.4

47.9

69.5

103.5

16.0

33.4

71.7

82.7

144.7

25.1

35.0

85.2

98.0

195.3

29.8

35.0

97.2

111.3

252.9

34.0

35.0

2011

2012

2013

2014

2015

2016E

2017E

2018E

Cash Flow Statement

Y/E Mar

Adjusted EBITDA

Non cash opr. exp (inc)

(Inc)/Dec in Wkg. Cap.

Tax Paid

Other operating activities

CF from Op. Activity

(Inc)/Dec in FA & CWIP

Free cash flows

(Pur)/Sale of Invt

Others

CF from Inv. Activity

Inc/(Dec) in Net Worth

Inc / (Dec) in Debt

Interest Paid

Divd Paid (incl Tax) & Others

CF from Fin. Activity

Inc/(Dec) in Cash

Add: Opening Balance

Closing Balance

(INR Million)

1 March 2016

Britannia Industries

NOTES

1 March 2016

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