Nirmal Bang Securities
Britannia is expected to deliver a strong performance, which will be ahead of its peers, with sales (revenue) growth of 22 per cent year-on-year (YoY) at Rs 3,294.4 crore, led by base business volume growth of 20 per cent versus a lower base of 3 per cent. The company has highlighted that it has recorded revenue growth of 24 per cent YoY in the first two months of the quarter. Earnings before interest, tax, depreciation, and amortisation (EBITDA) margin is likely to expand by 150 basis points (bps) YoY to 16.1 per cent on account of declining prices of key raw materials and cost efficiencies. Adjusted profit after tax (PAT) is expected to grow by 52 per cent YoY at Rs 401.6 crore due to a lower tax rate compared to the base quarter.
The brokerage expects nearly 22 per cent YoY revenue growth (largely volume-led) at Rs 3,285.3 crore due to a surge in in-house food consumption trends. EBITDA is estimated to rise 40.3 per cent YoY at Rs 553.6 crore while EBITDA margin is seen at 16.9 per cent, up 223 bps YoY led by leverage/A&P cuts. Net profit is pegged at Rs 419.8 crore, up 57.4 per cent YoY.
According to Emkay Global, Britannia is expected to post net sales of Rs 3,270.1 crore, up 21.1 per cent YoY, and 14 per cent quarter-on-quarter (QoQ), led by volume growth in high-teens. EBITDA is expected to rise 35.5 per cent YoY and 17.7 per cent QoQ to Rs 534.7 crore while EBITDA margin is estimated to expand 170 bps YoY and 60 bps QoQ at 16.4 per cent. "Moderation in wheat and skim milk powder (SMP) prices, along with lower crude prices, to improve gross margins sequentially. Cost savings and lower ad spends should help sustain operating margins," the brokerage said. Profit before tax (PBT) is seen at Rs 539.7 crore, up 32.5 per cent YoY and 18 per cent QoQ while net profit is projected to grow 51 per cent YoY and 7.2 per cent QoQ at Rs 399.5 crore.
It estimates Britannia’s revenue to increase sharply by 19.6 per cent YoY to Rs 3,201.9 crore, led by strong 18 per cent domestic volume growth and the rest from product and price mix change. The brokerage believes that higher revenue growth could aid operating leverage resulting in 43.1 per cent YoY growth in EBITDA at Rs 564.8 crore. It expects EBITDA margin to expand nearly 290 bps YoY to 17.6 per cent, led by scale benefits and a decrease in advertising expenses. It has built-in a 62 per cent YoY increase in net profit at Rs 432 crore owing to lower tax rate benefit.