Motilal Oswal: Britannia Q1 Significant Beat Leads To 15% Earnings Upgrade; Expensive Valuations Drive Neutral Rating   
Packets of biscuits manufactured by Parle Products Pvt. Ltd. and Britannia Industries Ltd. on display in Gayatri Dry Fruits and General Stores in Crawford Market, Mumbai. (Photographer: Vivek Amre/BloombergQuint)

Motilal Oswal: Britannia Q1 Significant Beat Leads To 15% Earnings Upgrade; Expensive Valuations Drive Neutral Rating   

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Motilal Oswal Report

Britannia Industries has been aided by a confluence of positive factors, such as high in-home consumption (biscuits constitute 82% of sales), reduction in advertisement spend, decline in material cost, and low promotional spend owing to strong demand. These are likely to drive the strongest topline growth since FY12 (18.3% in FY21E) and the highest Profit after Tax growth since FY16 (38% in FY21E).

However, this extraordinary earnings growth in FY21 presents a significant hurdle from an FY22/FY23 perspective as none of these factors present a structural positive. Furthermore, material costs could result in high volatility in earnings for BRIT, it has one of the lowest gross margins among peers (40% in FY20)

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Motilal Oswal Britannia Result Update.pdf

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