NEUTRAL Hungry for growth - HDFC securities Industries - 1QFY19 - HDFC sec...: The revenue mix of...

RESULTS REVIEW 1QFY19 08 AUG 2018

Britannia Industries NEUTRAL

HDFC securities Institutional Research is also available on Bloomberg HSLB <GO>& Thomson Reuters

Hungry for growth BRIT reported another solid quarter with revenue growth of 14% (volume-led) to Rs 25.3bn (exp. 13.5%). Higher than expected other expenses (up 14%) led to a marginal miss in EBITDA estimates. EBITDA/PAT were up 19/19% (exp. 26/24%).

We attended the analyst meet of Britannia and reinforced strong earnings visibility. As earlier highlighted, management has embarked on an aggressive intensity w.r.t. to new launches, category expansion, and revamping its dairy as well as international business. The key thrust for Britannia is to become a complete packaged food company. We continue to be bullish on Britannia’s strong structural strength and believe that the company can leverage its brand, distribution and capability into newer avenues as well. However, our estimates don’t change (higher than consensus, street will upgrade) as we believe 16% revenue CAGR over FY18-FY21E (vs. 10% CAGR over FY15-FY18) largely captures the renewed intent. BRIT was our top pick during the last 12m, however after its dream run of ~40/88% in the stock during the last 6/12m, most of the positives are priced-in. We

downgraded our rating to NEUTRAL during our 1QFY19 preview and continue to retain the same.

We like BRIT owing to (1) Premiumisation (~80% mix of premium biscuits vs. industry of 55%), (2) Distribution expansion (rural and weak states), (3) Entry in new segments (croissants and other macro snacking products), (5) Cost optimization (saving of Rs 2.40bn in FY19 vs. Rs 2.25bn in FY18).

We model 23% EPS CAGR over FY18-21E. We value at 45x Jun-20 EPS. Our TP is at Rs 6,257 (earlier Rs 6,307)

Highlights for the quarter EBITDA was up by 19%: Benign input inflation, richer

mix and favourable base drove GM expansion of 128bps to 40%. Employee/other expense up by 17/14% resulting in 79bps EBITDAM expansion to 15.3% (est. of 16.1%). Other income grew by 19% resulting in APAT growth of 19% to Rs 2.58bn (exp. Rs 2.67bn)

Near-term outlook: New product launches, stable RM, revival in demand (especially in rural) and continued cost optimisation will drive earnings in the ensuing quarters. Rich valuations warrants limited upside.

Financial Summary (Rs mn) 1QFY19 1QFY18 YoY (%) 4QFY18 QoQ (%) FY17 FY18 FY19E FY20E FY21E Net Revenue 25,438 22,637 12.4 25,375 0.2 90,541 99,140 1,13,680 1,33,537 1,55,646 EBITDA 3,894 3,285 18.5 3,971 (1.9) 12,782 15,017 18,354 22,490 26,931 APAT 2,581 2,161 19.4 2,632 (1.9) 8,846 10,040 12,666 15,676 19,081 EPS (Rs) 21.5 18.0 19.4 21.9 (1.9) 73.7 83.6 105.5 130.6 158.9 P/E (x) 84.1 74.1 58.8 47.5 39.0 EV/EBITDA (x) 57.8 48.9 39.7 32.0 26.6 Core RoCE (%) 44.1 39.1 46.3 50.4 54.7 Source: Company, HDFC sec Inst Research

INDUSTRY FMCG

CMP (as on 7 Aug 2018) Rs 6,200

Target Price Rs 6,257

Nifty 11,389

Sensex 37,666

KEY STOCK DATA

Bloomberg BRIT IN

No. of Shares (mn) 120

MCap (Rs bn)/(US$ mn) 744/10,838

6m avg traded value (Rs mn) 715

STOCK PERFORMANCE (%)

52 Week high / low Rs 6,628 /3,900

3M 6M 12M

Absolute (%) 13.3 36.3 50.9

Relative (%) 6.3 25.7 34.2

SHAREHOLDING PATTERN (%)

Promoters 50.70

FIs & Local MFs 12.61

FPIs 17.05

Public & Others 19.64 Source : BSE

Naveen Trivedi [email protected] +91-22-6171-7324 Siddhant Chhabria [email protected] +91-22-6171-7336

BRITANNIA INDUSTRIES : RESULTS REVIEW 1QFY19

Page | 2

Analyst Meet Takeaways New launches to drive growth: After 2 years of lull,

BRIT returns to new product launches to drive volume growth. This trend of new launches is prevalent with most FMCG companies in FY19 since FY17-FY18 was disrupted by demonetisation and GST implementation. However, we observed that Britannia’s aggression is higher than its peers since they look to transform the org. to a packaged food company. The also intent to refresh their packaging and advertisement of its core portfolio.

New growth drivers: Management is trying to leverage improving macro tailwinds w.r.t. volume acceleration. The company believes the growth drivers would be Cake, Chipita, Dairy and International business. Bread, Cake and Rusk are low penetrated categories in India vs. many countries and have higher share from them as compared to biscuits. New product launches would be largely in 2HFY19.

Changing revenue pie: The revenue mix of Britannia would change going ahead. Currently Biscuits contributes 75%, Dairy ~5%, International ~5% and rest 15% from Rusk, Cake and Bread. The biscuits contribution will decline to <70% in the medium term.

Margin accretive launches: All new product launches would be gross margin accretive since they will cater to premium segment. Even Bread margin has improved significantly after rationalisation of cost and change in sourcing.

New brand logo: BRIT has changed the logo to refresh its identity. The new logo adds shades of yellow and green at the bottom of the old logo that signifies the excitement and goodness respectively.

Focus on effective consumer campaign: The company has revamped its brand strategy and is

focusing on more effective consumer campaigns. On the completion of 100 years, Britannia will be running consumer campaigns like “Tu Sau Saal Jiyega” to thank the consumers and trying to cover its entire biscuit range with variety of consumers. The company is trying to use digital marketing to maximise its recall.

Distribution: The company sells 1bn products in a month to cater to 77mn households through 5mn outlets. The company added 0.33mn direct reach over the last 15 months to 1.84mn outlets.

Hindi Belt: Britannia continued to grow faster in its weak states (Rajasthan, Gujarat, UP, MP) that now contributes to ~18-20% for Britannia vs. these states contribute ~40% for the industry. These states were contributing single digit few years back.

Dairy: Management has aggressive plans for ramping its dairy business. Currently dairy business is ~Rs 5bn and plans are to make it ~Rs 15bn over the next 3 years. VAP would drive the dairy business (not looking at liquid milk). The key categories will be Cheese, Yoghurt, Beverage and Dairy Whitener.

International business: Despite having presence in >70 countries, the international business does not contribute significantly. The SEZ facility at Mundra (Gujarat) would help in accelerating international business. The biscuits and rusks manufactured at the Gujarat plant will be exported to international markets such as North America, the UK, African countries, Singapore, Australia etc.

ASP to be range bound; ~4-4.5% of sales: Despite focus on new products, management expects that ASP spend would not increase significantly and will sustain in the range of 4-4.5% of sales. Thus, not impacting EBITDA margin.


Page | 3

Quarterly Financials Year to March (Rs mn) 1QFY19 1QFY18 YoY (%) 4QFY18 QoQ (%) FY18 FY17 YoY (%) Net Revenue 25,438 22,637 12.4 25,375 0.2 99,140 90,541 9.5 Material Expenses 15,264 13,873 10.0 15,613 (2.2) 61,071 55,887 9.3 Employee Expenses 1,086 926 17.3 1,084 0.2 4,016 3,526 13.9 Other Operating Expenses 5,195 4,553 14.1 4,707 10.4 19,036 18,346 3.8 EBITDA 3,894 3,285 18.5 3,971 (1.9) 15,017 12,782 17.5 Depreciation 356 332 7.4 424 (15.8) 1,421 1,193 19.1 EBIT 3,537 2,953 19.8 3,548 (0.3) 13,596 11,589 17.3 Other Income 420 352 19.3 444 (5.4) 1,664 1,505 10.5 Interest Cost 24 13 92.1 24 3.0 76 55 39.3 Exceptional item (0) 2 na (6) na (2) 3 (164.3) PBT 3,933 3,294 19.4 3,962 (0.7) 15,182 13,043 16.4 Tax 1,352 1,133 19.3 1,330 1.6 5,142 4,197 22.5 RPAT 2,581 2,161 19.4 2,632 (1.9) 10,040 8,846 13.5 EPS 21.5 18.0 19.4 22 (1.9) 83.6 73.7 13.4 Margin Analysis

Particulars (%) 1QFY19 1QFY18 YoY (bps) 4QFY18 QoQ (bps) FY18 FY17 YoY (%) Material Expenses 60.0 61.3 (128) 61.5 (153) 61.6 61.7 (12.5) Employee Expenses 4.3 4.1 18 4.3 (0) 4.1 3.9 15.6 Other Operating Expenses 20.4 20.1 31 18.6 187 19.2 20.3 (106.1) EBITDA Margin 15.3 14.5 79 15.6 (34) 15.1 14.1 103.0 Tax Rate 34.4 34.4 (1) 33.6 80 33.9 32.2 169.4 PAT Margin 10.1 9.5 60 10.4 (23) 10.1 9.8 35.6 Source: Company, HDFC sec Inst Research

Domestic revenue growth was driven by double digit volume growth Commodity inflation has been stable. Gross margins expanded by 128bps (-112bps in 1QFY18) to 40% on account of richer mix and favourable base Higher than expected other expenses (exp. up 9.5%) led to a marginal miss in EBITDA estimates


Page | 4

Quarterly Net Revenue Quarterly Domestic Volume Growth

Source: Company, HDFC sec Inst Research Source: Company, HDFC sec Inst Research Quarterly EBITDA Quarterly Gross And EBITDA Margin

Source: Company, HDFC sec Inst Research Source: Company, HDFC sec Inst Research

Consolidated net revenue grew by 13.6% with rural growing faster than urban From 2HFY19 BRIT ceases to benefit from favourable base Richer mix and stable commodity inflation has drive the recent GM expansion

0.0%

4.0%

8.0%

12.0%

16.0%

-

5,000

10,000

15,000

20,000

25,000

30,000

Q2F

Y16

Q3F

Y16

Q4F

Y16

Q1F

Y17

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Y17

Q3F

Y17

Q4F

Y17

Q1F

Y18

Q2F

Y18

Q3F

Y18

Q4F

Y18

Q1F

Y19

Net Revenue YoY Chg (%) - RHSRs mn

0%

20%

40%

60%

80%

-

800

1,600

2,400

3,200

4,000

4,800

Q2F

Y16

Q3F

Y16

Q4F

Y16

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Y17

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Y17

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Y17

Q1F

Y18

Q2F

Y18

Q3F

Y18

Q4F

Y18

Q1F

Y19

EBITDA YoY Chg (%) - RHSRs mn

6%

9%

11%

14%

16%

37%

39%

40%

42%

Q2F

Y16

Q3F

Y16

Q4F

Y16

Q1F

Y17

Q2F

Y17

Q3F

Y17

Q4F

Y17

Q1F

Y18

Q2F

Y18

Q3F

Y18

Q4F

Y18

Q1F

Y19

Gross Margin (%) - LHS EBITDA Margin (%) - RHS

10%

12%11%

10%

8% 8%

2% 2%3%

6%

12%11%

13%

0%

2%

4%

6%

8%

10%

12%

14%

Q1F

Y16

Q2F

Y16

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Q1F

Y19


Page | 5

Revenue Performance Gross Margin


EBITDA Margin NPM


34 38 46

55 61 68

78 83 90 98.3

113

132

154

0%

5%

10%

15%

20%

25%

-

40

80

120

160

FY09

FY10

FY11

FY12

FY13

FY14

FY15

FY16

FY17

FY18

FY19

E

FY20

E

FY21

E

Net Sales YoY Gr. CAGR (%) - RHS

Rs bn

We expect revival in consumer demand, continued market share gains and new launches to support healthy growth in FY19 & FY20 BRIT’s cost saving for FY18 was Rs 2.25bn, higher than Rs 1.5bn achieved in FY17. Guidance for FY19 is at Rs 2.4bn

38%

36%

34%36%

38%

40%40% 40%

38% 38%39%

40%40%

28.0%

32.0%

36.0%

40.0%

44.0%

FY09

FY10

FY11

FY12

FY13

FY14

FY15

FY16

FY17

FY18

FY19

E

FY20

E

FY21

E

7%

5% 5% 6% 7%

9%

11%

14% 14%15%16%

17%17%

0.0%

3.0%

6.0%

9.0%

12.0%

15.0%

18.0%

FY09

FY10

FY11

FY12

FY13

FY14

FY15

FY16

FY17

FY18

FY19

E

FY20

E

FY21

E

4%

3% 3%4% 4%

6%

8%

10%10%10%11%

12%12%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

FY08

FY09

FY10

FY11

FY12

FY13

FY14

FY15

FY16

FY17

FY18

FY19

E

FY20

E


Page | 6

Revenue Growth In Weak States

Source: Company, HDFC sec Inst Research Direct Reach Rural distribution (Rural Preferred Dealers)


UP grew strongly in FY18 which is a reflection of the success BRIT is attaining in the weak states BRIT’s market share is in the low teens in the weak states Gujarat, Rajasthan, UP, MP and Chhattisgarh combined comprise ~35% of India’s population. Further, gaining traction in these states would spur BRIT’s growth momentum BRIT’s market share in Gujarat, Rajasthan, UP and MP is just 1/5th that of Parle (market leader)

17%

10% 10%

19%

26%

15%

9%

19%

23%

13%9%

20%16% 15% 15%

27%24% 22% 24%

37%

-8%

0%

8%

16%

24%

32%

40%

Gujarat MP UP Rajasthan

FY15 FY16 FY17 FY18 1QFY19

Encouraging to see UP showing an uptick in growth

0.73

1

1.26

1.55

-

0.45

0.90

1.35

1.80

FY14

FY15

FY16

FY17

FY18

mnmn

1.84

6 7

8

10

14

-

4

8

12

16

FY14

FY15

FY16

FY17

FY18

000'S


Page | 7

BRIT’s Market Share

Source: Company, HDFC sec Inst Research BRIT vs. Parle Market share

Source: Company, AC Nielsen

Management’s strategies have succeeded in gaining profitable market share in the last 2 years Premiumisation, innovation and distribution expansion were the key drivers for BRIT to gain market share over the years


Page | 8

Wastage Reduction: Where did it come from? Cost Efficiency Program 70% Reduction in Write Offs

Source: Company, HDFC sec Inst Research Source: Company, HDFC sec Inst Research| Note: Write offs is indexed to 100

30% Reduction in Trade Loads 30% Reduction in Market Returns

Source: Company, HDFC sec Inst Research| Note: Trade loads is indexed to 100

Source: Company, HDFC sec Inst Research| Note: Market return is indexed to 100

Themes of cost efficiency: 1) Reducing distance to market 2) New & large factories for efficiencies 3) Reduction in wastages 4) Value engineering

100 104

72

26 30 31

0

20

40

60

80

100

120

FY13

FY14

FY15

FY16

FY17

FY18

10092

73 7770 70

0

20

40

60

80

100

120

FY13

FY14

FY15

FY16

FY17

FY18

100 102

75 72 70 70

0

20

40

60

80

100

120

FY13

FY14

FY15

FY16

FY17

FY18

510

920 1,190

1,560

2,250

-

500

1,000

1,500

2,000

2,500

FY14

FY15

FY16

FY17

FY18

Rs mn

Cumulative Rs 6,500mn costs saved


Page | 9

Wheat Flour Prices Sugar Prices


RPO Prices Milk Prices


BRIT continues to enjoy benign commodity inflation


Page | 10

Key Assumptions Assumptions FY17 FY18 FY19E FY20E FY21E Revenue Growth (%)

Biscuits and high protein food 8.0 9.5 10.5 11.5 11.0 Bread, bread toast and rusk 8.0 8.0 15.0 25.0 25.0 Cake 12.0 9.5 18.0 25.0 25.0 Dairy Business 5.0 5.0 15.0 30.0 40.0 International Business (13.8) 8.0 20.0 20.0 20.0

Gross Margin (%) 38.3 38.4 39.1 40.0 40.3 ASP (% of sales) 4.3 4.1 4.1 4.3 4.3 Distribution (% of sales) 4.9 4.9 4.8 4.8 4.7 EBITDA Margin (%) 14.1 15.1 16.1 16.8 17.3 Tax Rate (%) 32.2 33.9 31.0 30.0 30.0 NPM (%) 9.8 10.1 11.1 11.7 12.3 Source: Company, HDFC sec Inst Research

Change in estimates

FY19E FY20E FY21E OLD NEW Chg (%) OLD NEW Chg (%) OLD NEW Chg (%)

Sales 1,13,294 1,13,680 0.3% 1,34,205 1,33,537 -0.5% 1,55,491 1,55,646 0.1% EBITDA 18,077 18,354 1.5% 22,602 22,490 -0.5% 26,904 26,931 0.1% APAT 12,387 12,666 2.3% 15,755 15,676 -0.5% 19,062 19,081 0.1% EPS 103 105.5 2.3% 132.4 130.6 -1.4% 158.6 158.9 0.2% Source: HDFC sec Inst Research


Page | 11

Peer Set Comparison

Company MCap

(Rs bn)

CMP (Rs) Reco. TP

(Rs)

EPS (Rs) P/E (x) EV/EBITDA (x) Core RoCE (%)

FY19E FY20E FY21E FY19E FY20E FY21E FY19E FY20E FY21E FY19E FY20E FY21E

HUL 3,737 1,730 NEU 1,709 29.4 35.5 42.7 58.8 48.7 40.5 40.9 34.4 29.0 71.4 73.8 74.4 ITC 3,673 301 BUY 367 10.1 11.1 12.3 29.9 27.1 24.5 18.9 16.8 15.0 37.9 40.1 43.0 GCPL 899 1,320 NR 1,160 26.7 31.3 37.3 49.3 42.2 35.4 37.0 31.5 26.5 20.5 23.2 27.3 Britannia 744 6,200 NEU 6,257 104.8 131.7 158.8 59.1 47.1 39.0 40.6 32.6 27.0 45.3 50.5 54.1 Dabur 775 440 BUY 461 9.6 11.6 13.8 46.0 37.9 32.0 38.0 31.5 26.5 53.0 59.4 66.2 Marico 466 361 BUY 388 8.2 10.6 12.4 44.1 34.0 29.2 31.8 25.1 21.6 46.2 56.7 62.5 Colgate 311 1,143 NEU 1,185 28.7 32.8 37.8 39.8 34.8 30.3 24.3 20.8 18.0 69.6 81.9 96.1 Emami 260 570 BUY 648 14.3 17.2 20.5 39.8 33.2 27.8 29.0 24.5 20.7 29.0 37.7 48.4 Jub. Food 197 1,490 BUY 1,562 25.8 31.8 39.2 57.7 46.8 38.0 30.8 25.6 21.4 56.6 71.9 89.2 Source: HDFC sec Inst Research


Page | 12

Income Statement Year End March (Rs mn) FY17 FY18 FY19E FY20E FY21E Net Revenues 90,541 99,140 1,13,680 1,33,537 1,55,646 Growth (%) 7.8 9.5 14.7 17.5 16.6 Material Expenses 55,887 61,071 69,231 80,122 92,921 Employee Expense 3,526 4,016 4,471 4,989 5,565 ASP Expense 3,850 4,113 4,661 5,742 6,693 Distribution Expense 4,459 4,864 5,464 6,418 7,325 Other Expense 10,037 10,059 11,500 13,776 16,212 EBITDA 12,782 15,017 18,354 22,490 26,931 EBITDA Growth (%) 5.3 17.5 22.2 22.5 19.7 EBITDA Margin (%) 14.1 15.1 16.1 16.8 17.3 Depreciation & Amortisation 1,193 1,421 1,364 1,705 2,009 EBIT 11,589 13,596 16,990 20,785 24,922 Other Income (Inc EO Items) 1,505 1,664 1,826 2,359 3,086 Interest 55 76 459 749 749 PBT 13,040 15,184 18,357 22,395 27,259 Tax 4,197 5,142 5,691 6,718 8,178 RPAT 8,846 10,040 12,666 15,676 19,081 Adjustment - - - - - APAT 8,846 10,040 12,666 15,676 19,081 APAT Growth (%) 7.3 13.5 26.2 23.8 21.7 Adjusted EPS (Rs) 73.7 83.6 105.5 130.6 158.9 EPS Growth (%) 7.3 13.4 26.2 23.8 21.7

Source: Company, HDFC sec Inst Research

Balance Sheet Year End March (Rs mn) FY17 FY18 FY19E FY20E FY21E SOURCES OF FUNDS Share Capital - Equity 240 240 240 240 240 Reserves 26,767 33,855 34,218 45,560 59,584 Total Shareholders Funds 27,007 34,095 34,458 45,800 59,824 Bonus Debentures 8,691 8,691 - Minority interest 26 131 131 131 131 Long Term Debt 314 846 846 846 846 Short Term Debt 930 1,159 1,192 1,237 1,286 Total Debt 1,244 2,005 2,038 2,082 2,132 Net Deferred Taxes (231) (226) (226) (226) (226) Non Current Liabilities 307 341 388 450 519 TOTAL SOURCES OF FUNDS 28,352 36,347 45,480 56,929 62,380 APPLICATION OF FUNDS Net Block 10,322 12,174 14,867 18,230 19,275 CWIP 1,478 2,423 2,481 1,546 1,128 Goodwill 1,278 1,282 1,282 1,282 1,282 LT Loans & Advances 1,002 1,744 2,000 2,350 2,738 Other Non Current Assets 264 292 335 394 459 Total Non-current Assets 14,345 17,916 20,965 23,802 24,882 Inventories 6,615 6,528 7,485 8,793 10,249 Debtors 1,792 3,046 3,493 4,103 4,782 Other Current Assets 12,030 11,507 12,505 14,689 17,121 Cash & Equivalents 6,076 12,657 18,561 26,137 29,389 Total Current Assets 26,513 33,738 42,044 53,722 61,541 Creditors 9,822 12,293 14,073 16,535 19,311 Other Current Liabilities 2,683 3,014 3,456 4,059 4,732 Total Current Liabilities 12,505 15,307 17,529 20,595 24,043 Net Current Assets 14,008 18,431 24,515 33,127 37,498 TOTAL APPLICATION OF FUNDS 28,353 36,347 45,480 56,929 62,380



Page | 13

Cash Flow Statement Year ending March (Rs mn) FY17 FY18 FY19E FY20E FY21E Reported PBT 13,040 15,184 18,357 22,395 27,259 Non-operating & EO Items (1,395) (1,511) - - - Interest Expenses 55 76 459 749 749 Depreciation 1,193 1,421 1,364 1,705 2,009 Working Capital Change (4,514) 2,283 (147) (992) (1,070) Tax Paid (3,966) (4,965) (5,691) (6,718) (8,178) OPERATING CASH FLOW ( a ) 4,413 12,488 14,342 17,138 20,769 Capex (3,518) (4,212) (4,040) (4,054) (2,547) Free Cash Flow (FCF) 895 8,276 10,302 13,084 18,222 Investments 1,271 (6,442) - (1,500) (1,500) Non-operating Income 749 1,091 (327) (425) (473) INVESTING CASH FLOW ( b ) (1,499) (9,563) (4,367) (5,979) (4,520) Debt Issuance/(Repaid) (70) 673 - - - Interest Expenses (55) (75) (459) (749) (749) FCFE 2,789 3,523 9,516 10,410 15,500 Share Capital Issuance 58 151 - - - Dividend (2,884) (3,174) (3,612) (4,335) (13,748) Others - 108 - - - FINANCING CASH FLOW ( c ) (2,951) (2,317) (4,071) (5,083) (14,497) NET CASH FLOW (a+b+c) (36) 608 5,904 6,076 1,752 EO Items, Others 355 49 0 0 (0) Closing Cash & Equivalents 1,208 1,864 7,768 13,844 15,596

Source: Company, HDFC sec Inst Research Note: Dividend in FY21 includes payment of bonus debentures

Key Ratios FY17 FY18 FY19E FY20E FY21E PROFITABILITY (%) GPM 38.3 38.4 39.1 40.0 40.3 ASP 4.3 4.1 4.1 4.3 4.3 EBITDA Margin 14.1 15.1 16.1 16.8 17.3 EBIT Margin 12.8 13.7 14.9 15.6 16.0 APAT Margin 9.8 10.1 11.1 11.7 12.3 RoE 36.9 32.9 37.0 39.1 36.1 RoIC (or Core RoCE) 44.1 39.1 46.3 50.4 54.7 RoCE 35.2 31.2 31.7 31.6 32.9 EFFICIENCY Tax Rate (%) 32.2 33.9 31.0 30.0 30.0 Fixed Asset Turnover (x) 6.4 5.7 5.3 5.0 5.2 Inventory (days) 26.7 24.0 24.0 24.0 24.0 Debtors (days) 7.22 11.21 11.21 11.21 11.21 Other Current Assets (days) 48.5 42.4 40.2 40.2 40.2 Payables (days) 39.6 45.3 45.2 45.2 45.3 Other Current Liab. (days) 10.8 11.1 11.1 11.1 11.1 Cash Conversion Cycle (days) 32.0 21.3 19.1 19.1 19.0 Net D/E (x) (0.2) (0.3) (0.5) (0.5) (0.5) Interest Coverage (x) 212.6 179.1 37.0 27.8 33.3 PER SHARE DATA (Rs) EPS 73.7 83.6 105.5 130.6 158.9 CEPS 83.7 95.5 116.9 144.8 175.7 Dividend 22.0 25.0 30.0 35.0 40.0 Book Value 225.1 284.0 287.0 381.5 498.3 VALUATION P/E (x) 84.1 74.1 58.8 47.5 39.0 P/BV (x) 27.5 21.8 21.6 16.3 12.4 EV/EBITDA (x) 57.8 48.9 39.7 32.0 26.6 EV/Revenues (x) 8.2 7.4 6.4 5.4 4.6 OCF/EV (%) 0.6 1.7 2.0 2.4 2.9 FCF/EV (%) 0.1 1.1 1.4 1.8 2.5 FCFE/Mkt Cap (%) 0.4 0.5 1.3 1.4 2.1 Dividend Yield (%) 0.4 0.4 0.5 0.6 0.6



Page | 14

RECOMMENDATION HISTORY

Rating Definitions BUY : Where the stock is expected to deliver more than 10% returns over the next 12 month period NEUTRAL : Where the stock is expected to deliver (-)10% to 10% returns over the next 12 month period SELL : Where the stock is expected to deliver less than (-)10% returns over the next 12 month period

Date CMP Reco Target 10-Aug-17 4,059 BUY 4,418 10-Oct-17 4,330 BUY 4,649 16-Nov-17 4,750 BUY 5,226 27-Dec-17 4,734 BUY 5,312 12-Jan-18 4,720 BUY 5,312 15-Feb-18 4,764 BUY 5,332 28-Feb-18 4,950 BUY 5,480 11-Apr-18 5,100 BUY 5,615 18-May-18 5,477 BUY 6,020

9-Jul-18 6,300 NEU 6,307 8-Aug-18 6,200 NEU 6,257

3,500

4,000

4,500

5,000

5,500

6,000

6,500

Aug-

17

Sep-

17

Oct

-17

Nov-

17

Dec-

17

Jan-

18

Feb-

18

Mar

-18

Apr-

18

May

-18

Jun-

18

Jul-1

8

Aug-

18

Britannia Inds TP


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