Britannia Industries shares rise 7% on Q4 profit, analysts upbeat

Shares of Britannia Industries, one of the India's biggest FMCG brands, surged 6.38 per cent to Rs 2,432 on Friday after the company reported a 55 per cent jump in net profit for the fourth quarter ended March 31, 2015.

Britannia Industries on Thursday announced a consolidated net profit of Rs 167.25 crore for the January-March period, against Rs 107.66 crore in the corresponding quarter a year ago. Net sales of the company grew 14.32 per cent year-on-year to Rs 2,031.83 crore during the quarter under review.

However, Britannia's total expenditure jumped 10.14 per cent yoy to Rs 1,810.69 crore. The rise can be attributed to the increase in cost of raw material, rise in selling and distribution cost, manufacturing expenses and employee cost.

Market experts are upbeat on the shares of Britannia Industries.

According to Religare Institutional Research, Britannia Industries posted above-expectation Q4 numbers. The brokerage house raised its 2015-16 and 2016-17 EPS by 4.3 per cent and 16 per cent, respectively, on expectaion of higher topline and margins led by a richer mix, price hike and benign RM cost. It has upgraded the target price for Britannia Industries to Rs 2,650 from Rs 2,200 earlier.

Sandeep Sharma, senior research analyst, Hem Securities, says: "The company is expanding its customer base by launching new products and renovating existing ones. Measures like cost containment; go-to-market strategy, increasing premiumisation, creating operational efficiencies through supply chain productivity, expanding product portfolio through new launches would drive profitability of the company going forward. We believe the company is trading at an attractive valuation at 53.30x and 43.40x of FY15EPS of Rs 42.21 and FY16EPS of Rs 51.84. For medium to long term invetment horizon, one can buy Britannia Industries stocks for a target price of Rs 2,700."