Britannia Industries – Tiger lost in the woods

Q3FY10 results review and earnings revision - ICICI Securities

Britannia Industries continued to disappoint in Q3FY10 – Net sales grew a muted 7.7% YoY, with profits declining a steep 37.3% YoY to Rs323mn. Volumes were under pressure as market share loss continued. Increase in input costs and higher ad spends reduced operating profit margins (OPM) 346bps YoY to a low of 4.8%. Despite significant earnings downgrade and target price being 6% lower than the current market price, we maintain HOLD as the impending bonus debenture of Rs170/share adds to investor returns. Also, the company trades at a reasonable FY11E EV/sales of 0.8x. Our revised 12-month target price is Rs1,475.

Source : Equity Bulls

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