03 June 2020 Results Review 4QFY20

Britannia Industries
4Q lags other food cos, guiding for strong 1Q REDUCE
Britannia (BRIT) clocked 2% yoy revenue growth (HSIE -2%) with flat CMP (as on 03 June 2020) Rs 3,510
volume. Co saw growth acceleration (8-10%) in Jan/Feb which was better than
Target Price Rs 2,852
what it clocked in 9MFY20 (5% yoy growth). Lockdown led supply chain
disruption impacted primary performance in March. Pantry loading NIFTY 10,062
supported other foods businesses in Q4 as Nestle and Marico’s Saffola posted
KEY
11% and 25% yoy growth which BRIT missed. However, BRIT’s recovery in OLD NEW
CHANGES
April/May was strong (24% yoy) owing to (1) Benefits of high home
Rating REDUCE REDUCE
consumption (April/May consumer offtake at ~20% for BRIT), (2) Market
share gain (particularly in Hindi belt), (3) Channel filling (~3% support), (4) Price Target Rs 2,711 2,852

Quicker resumption of plants and supply chain than peers, and (5) Support FY21E FY22E
EPS %
from deeper distribution reach. With consumers refraining from eating +6% +5%
outside, we expect Britannia to deliver healthy growth in 1HFY21, before
aggregate demand pressure kicks-in in 2HFY21. Cost control and moderation
KEY STOCK DATA
in RM inflation will sustain EBITDA margin in FY21. We increase EPS
estimate by 6/5% for FY21/FY22. However, we remain cautious due to Bloomberg code BRIT IN

rich valuations (47x FY22 P/E) coupled with group company investments (via No. of Shares (mn) 240
ICD), rising gross debt and non-current investments. We value BRIT at 38x MCap (Rs bn) / ($ mn) 844/11,187
P/E on Mar-22E EPS, and derive a TP of Rs 2,852. Maintain REDUCE.
6m avg traded value (Rs mn) 1,961
▪ Marginal beat in revenue: Consolidated revenue saw a growth of 2% yoy to 52 Week high / low Rs 3,708/2,100
Rs 28.67bn (+10% in 4QFY19 and 5% in 3QFY20) vs exp. decline of 2%. We
expect flat volume in 4Q (+7% in 4QFY19 and +2% in 3QFY20) vs. est decline
STOCK PERFORMANCE (%)
of 4%. Co saw healthy growth in Jan/Feb (8-10% growth) after moderate
performance in 9MFY20 (5%). Market share gain in biscuits continued for 3M 6M 12M

the co as it increased the gap from the second placed player. However, the Absolute (%) 16.0 15.2 18.2
sudden lockdown impacted revenue and net profit for Britannia by 7-10%. Relative (%) 27.7 31.3 33.5
The expanding rural reach will also aid co as rural economy is expected to
do better than urban in the near term.
SHAREHOLDING PATTERN (%)
▪ EBITDA growth of 4%: GM dipped by 152bps yoy (+273bps in 4QFY19 and Dec-19 Mar-20
-44bps in 3QFY20) to 39.7% (HSIE 40.6%) as RM inflation sustained
Promoters 50.63 50.63
(particularly dairy and palm oil) in 4Q. Employee/Other expenses were up
by +12/-9% yoy. EBITDAM expanded by 24bps yoy (-5bps in 4QFY19 and FIs & Local MFs 13.56 13.38
+94bps in 3QFY20) to 15.8%. EBITDA grew by 4% yoy (+10% in 4QFY19 and FPIs 15.79 14.71
+11% in 3QFY20) to Rs 4.54bn (exp Rs 4.19bn). PAT grew by 27% yoy to Rs
Public & Others 20.02 21.28
3.7bn (HSIE Rs 3.2bn) owing to lower taxes.
Pledged Shares 0.00 0.00
 Call & other takeaways: (1) Demand picks up in Jan/Feb, (2) All factories,
depots and distributors of the co are operational, (3) Biscuits are expected to Source : BSE

do strong growth due to consumers reducing eating out, (4) New launches
will continue in a gradual manner in FY21, (5) ICDs to group cos are a bit Varun Lohchab
lower than last year (~Rs 6bn). Non-group ICDs saw increase in FY20. [email protected]
+91-22-6171-7334
Financial Summary
4Q 4Q YoY 3Q QoQ
FY19 FY20P FY21E FY22E
Naveen Trivedi
YE Mar (Rs mn)
FY20 FY19 (%) FY20 (%) [email protected]
Net Sales 28,677 27,990 2.5 29,828 (3.9) 1,10,547 1,15,780 1,30,234 1,42,785 +91-22-6171-7324
EBITDA 4,543 4,366 4.1 5,021 (9.5) 17,334 18,433 20,919 23,305
APAT 3,729 2,943 26.7 3,700 0.8 11,555 14,067 15,772 18,053 Aditya Sane
Diluted EPS (Rs) 15.5 12.2 26.7 15.4 0.9 48.1 58.5 65.6 75.1 [email protected]
P/E (x) 73.0 60.0 53.5 46.8 +91-22-6171-7336
EV / EBITDA (x) 47.9 44.6 38.9 34.4
RoCE (%) 39.2 42.8 49.1 55.5
Source: Company, HSIE Research

HSIE Research is also available on Bloomberg ERH HDF <GO> & Thomson Reuters
 Britannia Industries: Results Review 4QFY20

Britannia Industries Quarterly Commentary

Particulars 1QFY20 2QFY20 3QFY20 4QFY20
Industry/ Co - Biscuits market witnessing - Market has continued to be - Rural slowdown continued to - Demand environment saw
Strategy slowing down of growth rates. tough. impact revenues improvement in Jan/Feb and
- Agri turmoil affecting the - Economic macros have not - Food inflation was significant growth was strong
value segment. seen an uptick. across categories, but - Direct reach was at 2.2mn and
- Hopeful of recovery for the - Expect recovery in the next 9- specifically in Dairy rural distribution reached 21k
economy within the next 6 12 months. - Food inflation can result in in Feb 20 vs 18k in Mar 19
months. - Consumers are leaning better rural income - All of the co’s factories are
towards more premium - Recovery in macros expected currently operational with
products. in 1-2 qtrs manpower restrictions
- Rural growth is much slower - Co is focusing on expanding - Co has seen 24% growth in
than urban distribution in rural markets April and May
- New launches will continue in
a gradual manner
Revenue
Biscuits - Creating new niches within - Co continued to gain mkt sh - Biscuits has seen slowdown - Co continued to gain market
the biscuit category to drive despite a weak market. predominantly in rural markets share and it widened the gap
premiumisation. - Going to start in-and-out in - Mkt share has grown with the 2nd placed player. Co
also saw strong market share
- Made mkt sh gains by biscuits segment. aggressively but growth has not
gains in the Hindi belt.
outpacing the market growth. - Test launched little hearts in held up
- Biscuits category has seen a
the West. - Mass biscuit segment has boost due to increased home
remained stagnant. consumption. Co also benefited
- Mid-premium products from being the most trusted
bringing growth brand.
- Impact of downtrading will be
set off through category growth
Others - Become the no. 2 brand in - Expect Treat Croissant to - Croissants and salty snacks - Breads category continued to
Milk Shakes within a year of surpass Bauli in WB. are still in test markets. Not do well with high single digit
the launch. - Don’t plan to get into Rs 10/5 expanding further due to growth and with improvement
- Made a limited launch of 3 bracket with croissants. slowdown. Delaying other in profitability.
formats Salty Snacks in the - Expanding Salty Snacks to the launches too - Dairy maintained its
south market. West. - Middle East is challenging but profitability despite a surge in
Nepal growing in high double dairy prices.
digits. Co is a market leader in - Co prioritized on biscuits, and
Nepal hence, some of the other
- Wafers- Co is now the no. 3 products took a backseat.
player. Focus is on creating a - Croissants are still in test
brand with a pull instead of markets in TN and WB. R&D
relying on promotions. Salted initiatives and production was
snacks will launch pan India in interrupted due to manpower
the next 6 months restriction in factories. Co has
now resumed production.
- International growth was in
double digits.
Margin
Gross Margin - Co was able to contain effects - Milk and flour saw huge - Impact of inflation was - Milk saw high inflation (50%
of commodity inflation by inflation but there was low controlled due to positions yoy). However, moderate
taking long positions in the inflation in sugar and deflation taken by the co in Aug 2019 inflation in Sugar and Flour
vulnerable commodities. in palm oil. - With the cost effective helped co restrict overall
- Co has stocked up on wheat - Overall commodity inflation inventory being over, inflation inflation to 4% yoy.
since April in anticipation of a remained moderate, expect it to could hit 5% from current 3%
sharp rise in prices. remain in that range. - Co will selectively pass on the
inflation through price increase.
EBITDA - Drop in PAT has been caused - Profitability improved aided - Operating margins at the - Co is focusing on targeted
Margin by inflation in milk prices in the by the corp tax cut highest A&P spends.
dairy business and investment - Reduction in other expenses - It is focusing on reducing
in the Britchip JV. mainly due to cost efficiency. fixed costs, controlling wastage
ASP has remained flattish and avoiding discretionary
- Other income will be stable spends.

Page | 2
Britannia Industries: Results Review 4QFY20

Quarterly Financial Snapshot

GM declined by 433bps YoY QoQ YoY
Particulars (Rs mn) Q4FY20 Q4FY19 YoY (%) Q3FY20 FY20 FY19
(%) (%)
(-345 in 4QFY19, -421bps in
Net Revenue 28,677 27,990 2.5 29,828 (3.9) 1,15,997 1,10,548 4.9
3QFY20) vs. expectation of -
Material Expenses 17,300 16,459 5.1 17,642 (1.9) 69,275 65,615 5.6
125bps.
Employee Expenses 1,209 1,082 11.7 1,216 (0.6) 4,867 4,418 10.2

Employee/A&P/Other Exp Other Operating Expenses 4,356 4,772 (8.7) 4,641 (6.1) 18,143 18,186 (0.2)
declined by 35/33/18% owing EBITDA 4,543 4,366 4.1 5,021 (9.5) 18,433 17,321 6.4
to cost rationalisation of Depreciation 485 469 3.3 467 3.8 1,848 1,619 14.2
operating costs and lower EBIT 4,058 3,897 4.1 4,554 (10.9) 16,585 15,702 5.6
marketing reinvestment rate. Other Income 786 618 27.2 652 20.6 2,794 2,078 34.5
Interest Cost 270 13 2,059.2 237 14.0 769 91 746.0
Share of (loss)/profit in
1 (3) na 3 na 4 (10) na
associates
Exceptional items (3) - - 165 -
PBT 4,578 4,499 1.8 4,972 (7.9) 18,449 17,679 4.4
Tax 849 1,557 (45.4) 1,273 (33.3) 4,507 6,125 (26.4)
RPAT 3,729 2,943 26.7 3,700 0.8 13,942 11,556 20.6
Adjustment - - - 125 -
APAT 3,729 2,943 26.7 3,700 0.8 14,067 11,556 21.7
EPS 15.5 12.2 26.7 15 0.9 116.2 96.3 20.6
Source: Company, HSIE Research

Quarterly Performance Analysis

MARGIN ANALYSIS YoY QoQ YoY
Q4FY20 Q4FY19 Q3FY20 FY20 FY19
(% of sales) (bps) (bps) (bps)
Material Expenses 60.3 58.8 152 59.1 118 59.7 59.4 37
Employee Expenses 4.2 3.9 35 4.1 14 4.2 4.0 20
Reported EBITDAM increased Other Operating
15.2 17.1 (186) 15.6 (37) 15.6 16.5 (81)
Expenses
by 101bps to 13.6% vs exp of
EBITDA Margin 15.8 15.6 24 16.8 (99) 15.9 15.7 22
13%.
Tax Rate 18.5 34.6 (1,605) 25.6 (705) 24.4 34.6 (1,021)
PAT Margin 13.0 10.5 249 12.4 60 12.0 10.5 157
APAT Margin 13.0 10.5 249 12.4 60 12.1 10.5 167
Source: Company, HSIE Research

All new launches are gross New Launches: Expanding Addressable Market
margin accretive to BRIT
Cream Wafers, Milk Shakes, Salted Snacks and Croissants
Within 1 year of launch BRIT
has become the no 3 player
with ~10% share in cream
wafers (Rs 6bn category)

Winkin’ Cow is now the no 2

milk shake brand (Rs 22bn
market)

BRIT entered the salty snacks

category via extruded snacks
(~Rs 80bn category). Co has
launched 5 variants with
focus on Rs 5 pack (80% share
of the category).
.

Source: Company, HSIE Research

Page | 3
Britannia Industries: Results Review 4QFY20

Quarterly Net Revenue Quarterly Domestic Volume Growth

Rs mn Net Revenue YoY Chg (%) - RHS 14%
13%
35,000 16.0% 12% 12%
12% 11%
30,000 10%
12.0%
8% 8%
25,000 8% 7% 7%
6%
8.0%
6%
20,000
4%
4% 3%
4.0% 2% 3%
15,000 2% 2%
2%
0%
10,000 0.0% 0%
Q4FY16
Q1FY17
Q2FY17
Q3FY17
Q4FY17
Q1FY18
Q2FY18
Q3FY18
Q4FY18
Q1FY19
Q2FY19
Q3FY19
Q4FY19
Q1FY20
Q2FY20
Q3FY20
Q4FY20

Q1FY17
Q2FY17
Q3FY17
Q4FY17
Q1FY18
Q2FY18
Q3FY18
Q4FY18
Q1FY19
Q2FY19
Q3FY19
Q4FY19
Q1FY20
Q2FY20
Q3FY20
Q4FY20
Source: Company, HSIE Research Source: Company, HSIE Research

Quarterly EBITDA Quarterly Gross and EBITDA Margin

Rs mn EBITDA YoY Chg (%) - RHS Gross Margin (%) - LHS EBITDA Margin (%) - RHS
5,600 50% 42%
24%
4,800 40%
41%
30% 22%
4,000 40%
20% 20%
3,200 39%
10% 18%
2,400 38% 16%
0%
1,600 37% 14%
-10%
800 -20% 36% 12%

- -30% 35% 10%

Q4FY16
Q1FY17
Q2FY17
Q3FY17
Q4FY17
Q1FY18
Q2FY18
Q3FY18
Q4FY18
Q1FY19
Q2FY19
Q3FY19
Q4FY19
Q1FY20
Q2FY20
Q3FY20
Q4FY20
Q4FY16
Q1FY17
Q2FY17
Q3FY17
Q4FY17
Q1FY18
Q2FY18
Q3FY18
Q4FY18
Q1FY19
Q2FY19
Q3FY19
Q4FY19
Q1FY20
Q2FY20
Q3FY20
Q4FY20

Source: Company, HSIE Research Source: Company, HSIE Research

Revenue Performance Gross Margin

Net Sales YoY Gr. CAGR (%) - RHS

40.3%
40.6%

40.2%

40.1%
40.3%
40.3%
39.7%

160 Rs bn 25% 42.0%

143
38.3%

38.4%

130
37.6%

20%
120 111 116 38.5%
35.6%

99
34.3%

91
84 15%
80 69 79 35.0%
62
55 10%
46
40 31.5%
5%

- 0% 28.0%
FY11

FY12

FY13

FY14

FY15

FY16

FY17

FY18

FY19

FY20E

FY21E

FY22E
FY20E
FY21E
FY22E
FY11
FY12
FY13
FY14
FY15
FY16
FY17
FY18
FY19

Source: Company, HSIE Research Source: Company, HSIE Research

Page | 4
Britannia Industries: Results Review 4QFY20

EBITDA margin NPM

16.3%

12.6%
16.1%

12.1%
15.9%

12.1%
15.7%
18.0% 14.0%

15.1%
14.5%

14.1%

10.5%
10.1%
9.8%

9.8%
15.0%
10.5%

11.0%

8.3%
12.0%
9.1%

5.7%
7.0%
6.8%

9.0%
5.7%

4.2%
5.1%

3.6%
2.9%
6.0%
3.5%
3.0%

0.0% 0.0%

FY11

FY12

FY13

FY14

FY15

FY16

FY17

FY18

FY19

FY20E

FY21E

FY22E
FY11

FY12

FY13

FY14

FY15

FY16

FY17

FY18

FY19

FY20E

FY21E

Source: Company, HSIE Research FY22E Source: Company, HSIE Research

Market share gains in Hindi belt

Source: Company, HSIE Research

Direct Reach Rural Distribution (Rural Preferred Dealers)

Mn 000'S
2.50 25.00
2.2 21.00
2.10
2.10 20.00 18.10
1.84
14.40
1.70 1.55 15.00

1.26 10.00
1.30 10.00 8.00
1.00 6.60

0.90 5.00

0.50 0.00
FY15

FY16

FY17

FY18

FY19

FY20
FY15

FY16

FY17

FY18

FY19

FY20

Source: Company, HSIE Research Source: Company, HSIE Research

Page | 5
Britannia Industries: Results Review 4QFY20

BRIT vs Parle vs ITC Market Share

Source: Company, HSIE Research

Overall Inflation for BRIT at ~4%

Source: Company, HSIE Research

Page | 6
 Britannia Industries: Results Review 4QFY20

Assumptions
Particulars (Rs mn) FY15 FY16 FY17 FY18 FY19 FY20P FY21E FY22E
Revenue Growth (%)
Biscuits and high protein food 13.9 10.9 8.0 8.0 11.5 4.0 12.0 8.5
Bread, bread toast and rusk 12.7 12.2 7.0 7.0 15.0 4.0 13.0 11.0
Cake 32.2 18.3 8.0 8.0 15.0 6.0 15.0 13.0
Dairy Business 10.1 (2.2) 2.5 (5.2) 8.0 6.0 6.0 10.0
International Business 23.3 28.1 (13.8) (3.1) 13.0 5.7 8.0 12.0
Gross Margin (%) 40.3 40.3 38.3 38.4 40.6 40.2 40.1 40.3
ASP (% of sales) 8.3 5.3 4.3 4.1 4.5 4.6 4.3 4.4
Distribution (% of sales) 5.4 5.1 4.9 4.9 5.0 5.2 5.0 5.0
EBITDA Margin (%) 11.0 14.5 14.1 15.1 15.7 15.9 16.1 16.3
Tax Rate (%) 27.5 32.5 32.2 33.9 34.6 24.4 25.2 25.2
NPM (%) 8.3 9.8 9.8 10.1 10.5 12.1 12.1 12.6

Change in Estimates
FY21E FY22E
OLD NEW Chg (%) OLD NEW Chg (%)
Net Sales 1,22,506 1,30,234 6.3% 1,33,890 1,42,785 6.6%
EBITDA 19,836 20,919 5.5% 22,271 23,305 4.6%
APAT 14,878 15,772 6.0% 17,146 18,053 5.3%
EPS 61.9 65.6 5.9% 71.4 75.1 5.2%

Peer Set Comparison

Mcap EPS (Rs) P/E (x) EV/EBITDA (x) Core RoCE (%)
CMP
Company (Rs Reco TP FY20E/ FY21E/ FY22E/ FY20E/ FY21E/ FY22E/ FY20E/ FY21E/ FY22E/ FY20E/ FY21E/ FY22E/
(Rs/sh)
bn) CY19P CY20E CY21E CY19P CY20E CY21E CY19P CY20E CY21E CY19P CY20E CY21E
HUL 4,595 2,123 REDUCE 1,969 31.7 37.1 41.9 67.0 57.2 50.7 45.9 39.4 35.0 230.7 46.5 28.8
ITC 2,420 197 BUY 221 12.5 11.9 13.0 15.7 16.6 15.2 10.9 11.0 9.9 44.5 43.4 48.0
Nestle 1,684 17,470 REDUCE 14,042 206.0 237.6 278.2 84.8 73.5 62.8 56.5 50.7 44.3 75.0 70.7 69.1
Dabur 821 466 REDUCE 404 8.6 9.0 10.1 54.0 51.6 46.1 44.9 42.3 37.5 44.6 40.6 44.5
Britannia 843 3,510 REDUCE 2,852 58.5 65.6 75.1 60.0 53.5 46.8 44.6 38.9 34.4 42.8 49.1 55.5
GCPL 672 658 REDUCE 529 14.4 15.7 17.6 45.6 41.8 37.3 32.2 31.6 28.8 19.0 18.9 21.4
Marico 433 335 REDUCE 283 8.0 8.4 9.4 41.8 39.8 35.5 29.4 28.0 25.8 41.8 43.2 46.5
United
417 574 ADD 586 10.9 11.0 14.0 52.8 52.1 41.0 28.5 28.5 23.8 16.0 19.6 23.5
Spirits
Colgate 372 1,366 ADD 1,328 30.0 31.2 35.0 45.5 43.8 39.1 30.5 28.3 25.3 64.7 63.9 75.2
Jubilant 223 1,693 REDUCE 1,420 26.8 20.7 35.5 63.2 81.7 47.7 37.8 44.9 28.6 28.4 11.5 21.7
Emami 86 190 REDUCE 221 11.7 11.6 13.0 16.2 16.3 14.6 11.6 11.5 10.3 23.2 24.1 29.9
Radico
46 345 BUY 363 16.0 18.2 22.7 21.6 19.0 15.2 13.4 11.9 9.8 14.5 12.8 14.7
Khaitan
Source: Company, HSIE Research

Page | 7
Britannia Industries: Results Review 4QFY20

Financials
Standalone Income Statement
Year ending March FY15 FY16 FY17 FY18 FY19 FY20P FY21E FY22E
Net Revenues 78,584 83,972 90,541 99,140 1,10,547 1,15,780 1,30,234 1,42,785
Growth (%) 13.7 10.4 7.8 9.5 11.5 4.7 12.5 9.6
Material Expenses 46,918 50,127 55,887 61,071 65,615 69,275 77,997 85,231
Employee Expense 2,806 3,414 3,526 4,016 4,418 4,877 5,354 5,863
ASP Expense 6,517 4,461 3,850 4,113 5,008 5,326 5,535 6,283
Distribution Expense 4,271 4,310 4,459 4,864 5,534 6,021 6,512 7,139
Other Expense 9,433 9,517 10,037 10,059 12,638 11,849 13,918 14,964
EBITDA 8,639 12,144 12,782 15,017 17,334 18,433 20,919 23,305
EBITDA Growth (%) 37.7 40.6 5.3 17.5 15.4 6.3 13.5 11.4
EBITDA Margin (%) 11.0 14.5 14.1 15.1 15.7 15.9 16.1 16.3
Depreciation & Amortisation 1,445 1,134 1,193 1,421 1,619 1,848 2,006 2,191
EBIT 7,194 11,010 11,589 13,596 15,715 16,585 18,913 21,113
Other Income (Including EO Items) 2,340 1,244 1,505 1,664 2,065 2,630 3,144 4,017
Interest 39 49 55 76 91 769 985 1,010
PBT 9,496 12,205 13,040 15,184 17,689 18,445 21,071 24,120
Tax 2,611 3,961 4,197 5,142 6,125 4,507 5,304 6,071
RPAT 6,886 8,246 8,846 10,040 11,555 13,942 15,772 18,053
Adjustment 402 - - - - (125) - -
Adjusted PAT 6,485 8,246 8,846 10,040 11,555 14,067 15,772 18,053
APAT Growth (%) 64.0 27.2 7.3 13.5 15.1 21.7 12.1 14.5
Adjusted EPS (Rs) 27.0 34.4 36.9 41.8 48.1 58.5 65.6 75.1
EPS Growth (%) 64.0 27.1 7.3 13.4 15.0 21.6 12.1 14.5
Source: Company, HSIE Research

Standalone Balance Sheet

Year End (March) FY15 FY16 FY17 FY18 FY19 FY20P FY21E FY22E
SOURCES OF FUNDS
Share Capital - Equity 240 240 240 240 240 241 241 241
Reserves 12,211 20,739 26,767 33,855 41,792 44,312 49,952 62,713
Total Shareholders Funds 12,451 20,979 27,007 34,095 42,033 44,552 50,192 62,954
Bonus Debentures - 7,210 7,210 7,210
Minority interest 24 25 26 131 327 327 327 327
Long Term Debt 433 377 314 846 619 451 451 451
Short Term Debt 1,015 934 930 1,159 761 7,480 7,480 7,480
Total Debt 1,448 1,311 1,244 2,005 1,380 7,931 7,931 7,931
Net Deferred Taxes (234) (444) (231) (226) (138) (196) (196) (196)
Non Current Liabilities 256 282 307 341 387 597 668 732
TOTAL SOURCES OF FUNDS 13,946 22,153 28,352 36,347 43,989 60,420 66,132 78,958
APPLICATION OF FUNDS
Net Block 7,334 8,343 10,322 12,174 15,579 17,392 17,386 17,944
CWIP (Including capital advances) 703 901 1,478 2,423 1,012 396 396 396
Goodwill 1,107 1,159 1,278 1,282 1,304 1,390 1,390 1,390
LT Loans & Advances 684 2,562 1,002 1,744 847 3,031 - -
Other Non Current Assets 372 562 264 292 1,011 425 478 524
Total Non-current Assets 10,200 13,528 14,345 17,916 19,753 22,632 19,649 20,253
Inventories 4,040 4,407 6,615 6,528 7,814 7,410 8,009 8,781
Debtors 1,358 1,706 1,792 3,046 3,942 3,204 3,907 4,284
Other Current Assets 4,659 6,095 12,030 11,507 14,910 14,820 16,671 18,277
Cash & Equivalents 7,443 8,760 6,076 12,657 15,323 30,528 38,363 49,829
Total Current Assets 17,500 20,967 26,513 33,738 41,989 55,961 66,950 81,171
Creditors 11,205 9,827 9,822 12,293 15,061 15,054 16,958 18,620
Other Current Liabilities 2,548 2,516 2,683 3,014 2,692 3,119 3,509 3,847
Total Current Liabilities 13,754 12,343 12,505 15,307 17,753 18,173 20,467 22,466
Net Current Assets 3,747 8,625 14,008 18,431 24,236 37,788 46,483 58,704
TOTAL APPLICATION OF FUNDS 13,946 22,152 28,353 36,347 43,989 60,420 66,132 78,958
Source: Company, HSIE Research

Page | 8
Britannia Industries: Results Review 4QFY20

Standalone Cash Flow

(Rs mn) FY15 FY16 FY17 FY18 FY19 FY20P FY21E FY22E
Reported PBT 9,496 12,205 13,040 15,184 17,689 18,445 21,071 24,120
Non-operating & EO Items (2,373) (1,092) (1,395) (1,511) - - - -
Interest Expenses 39 49 55 76 91 769 985 1,010
Depreciation 1,445 1,134 1,193 1,421 1,619 1,848 2,006 2,191
Working Capital Change 253 1,329 (4,514) 2,283 (3,362) 1,653 (860) (755)
Tax Paid (3,015) (4,032) (3,966) (4,965) (6,125) (4,507) (5,304) (6,071)
OPERATING CASH FLOW ( a ) 5,845 9,593 4,413 12,488 9,912 18,208 17,900 20,495
Capex 463 (2,494) (3,518) (4,212) (4,033) (3,145) (2,000) (2,750)
Free Cash Flow (FCF) 6,308 7,099 895 8,276 5,879 15,063 15,900 17,745
Investments (6,318) (5,217) 1,271 (6,442) (3,959) (14,165) (5,000) (5,000)
Non-operating Income 1,351 659 749 1,091 904 (1,446) 3,048 18
INVESTING CASH FLOW ( b ) (4,503) (7,052) (1,499) (9,563) (7,088) (18,755) (3,952) (7,732)
Debt Issuance/(Repaid) (100) (147) (70) 673 (402) 6,551 - -
Interest Expenses (33) (51) (55) (75) (91) (769) (985) (1,010)
FCFE 1,209 2,343 2,789 3,523 2,331 5,234 12,963 11,753
Share Capital Issuance - 43 58 151 - - - -
Dividend (Inc tax) (1,681) (2,308) (2,884) (3,174) (3,618) (4,338) (10,131) (5,291)
Others - - - 108 - - - -
FINANCING CASH FLOW ( c ) (1,814) (2,462) (2,951) (2,317) (4,110) 1,444 (11,117) (6,301)
NET CASH FLOW (a+b+c) (472) 79 (36) 608 (1,287) 896 2,832 6,462
EO Items, Others 1,832 379 355 49 (7) 144 4 4
Closing Cash & Equivalents 2,263 889 1,208 1,864 570 1,610 4,446 10,912

Key Ratios
Particulars FY15 FY16 FY17 FY18 FY19 FY20P FY21E FY22E
PROFITABILITY (%)
GPM 40.3 40.3 38.3 38.4 40.6 40.2 40.1 40.3
ASP 8.3 5.3 4.3 4.1 4.5 4.6 4.3 4.4
EBITDA Margin 11.0 14.5 14.1 15.1 15.7 15.9 16.1 16.3
EBIT Margin 9.2 13.1 12.8 13.7 14.2 14.3 14.5 14.8
APAT Margin 8.3 9.8 9.8 10.1 10.5 12.1 12.1 12.6
RoE 63.5 49.3 36.9 32.9 30.4 32.5 33.3 31.9
RoIC (or Core RoCE) 76.7 74.8 44.1 39.1 39.2 42.8 49.1 55.5
RoCE 54.8 45.9 35.2 31.2 28.9 28.1 26.1 25.9
EFFICIENCY
Tax Rate (%) 27.5 32.5 32.2 33.9 34.6 24.4 25.2 25.2
Fixed Asset Turnover (x) 4.6 4.4 6.4 5.7 4.9 4.4 4.6 4.6
Inventory (days) 18.8 19.2 26.7 24.0 25.8 23.4 22.4 22.4
Debtors (days) 6.3 7.4 7.2 11.2 13.0 10.1 11.0 11.0
Other Current Assets (days) 21.6 26.5 48.5 42.4 49.2 46.7 46.7 46.7
Payables (days) 52.0 42.7 39.6 45.3 49.7 47.5 47.5 47.6
Other Current Liab & Provns (days) 11.8 10.9 10.8 11.1 8.9 9.8 9.8 9.8
Cash Conversion Cycle (days) (17.2) (0.6) 32.0 21.3 29.4 22.9 22.8 22.7
Net D/E (x) (0.5) (0.4) (0.2) (0.3) (0.3) (0.5) (0.6) (0.7)
Interest Coverage (x) 186.4 226.1 212.6 179.1 172.9 21.6 19.2 20.9
PER SHARE DATA (Rs)
EPS 27.0 34.4 36.9 41.8 48.1 58.5 65.6 75.1
CEPS 33.1 39.1 41.8 47.7 54.8 66.2 73.9 84.2
Dividend 8.0 10.0 11.0 12.5 15.0 35.0 22.0 25.0
Book Value 51.9 87.4 112.5 142.0 174.9 185.2 208.7 261.8
VALUATION
P/E (x) 129.9 102.2 95.2 83.9 73.0 60.0 53.5 46.8
P/BV (x) 67.6 40.2 31.2 24.7 20.1 18.9 16.8 13.4
EV/EBITDA (x) 96.8 68.8 65.5 55.4 47.9 44.6 38.9 34.4
EV/Revenues (x) 10.6 9.9 9.3 8.4 7.5 7.1 6.2 5.6
OCF/EV (%) 0.7 1.1 0.5 1.5 1.2 2.2 2.2 2.6
FCF/EV (%) 0.8 0.9 0.1 1.0 0.7 1.8 2.0 2.2
FCFE/Mkt Cap (%) 0.1 0.3 0.3 0.4 0.3 0.6 1.5 1.4
Dividend Yield (%) 0.2 0.3 0.3 0.4 0.4 1.0 0.6 0.7
Source: Company, HSIE Research

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Britannia Industries: Results Review 4QFY20

RECOMMENDATION HISTORY
Date CMP Reco Target
Britannia Inds TP 9-Jul-19 2,763 NEU 3,011
11-Aug-19 2,588 NEU 2,674
3,600
22-Sep-19 2,867 BUY 3,433
3,400 11-Oct-19 3,037 BUY 3,620
3,200 15-Nov-19 3,195 BUY 3,513
30-Dec-19 3,042 BUY 3,638
3,000
9-Jan-20 3,001 BUY 3,678
2,800 11-Feb-20 3,156 BUY 3,551
2,600 2-Mar-20 2,970 ADD 3,318
13-Apr-20 2,803 REDUCE 2,711
2,400
14-Apr-20 2,711 REDUCE 2,711
2,200 3-Jun-20 3,510 REDUCE 2,852
2,000 From 2nd March 2020, we have moved to new rating system
Oct-19
Jul-19

Aug-19

Jan-20

Apr-20
Sep-19

May-20
Mar-20
Jun-19

Dec-19

Jun-20
Nov-19

Feb-20

Rating Criteria
BUY: >+15% return potential
ADD: +5% to +15% return potential
REDUCE: -10% to +5% return potential
SELL: >10% Downside return potential

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Britannia Industries: Results Review 4QFY20

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