Britannia Industries is a leading Indian food processing firm, making biscuits, dairy products

and bakery items like cakes, rusks and breads. This firm has seen a major growth since 2010,
with moderate revenue growth, but excellent margin improvements. The ongoing initiatives
in manufacturing capacity addition, sales team synergies and nutrition oriented product
launches should see BIL emerge as a premium food giant. Buy.

Business Profile

Britannia Industries (BIL) is a Bangalore based firm selling bakery and dairy products.
Started in 1892, it is one of the largest food processing firms in India.
Sales turnover in FY13 was Rs 5,615 crores and PAT is 233.9 cr. Sales have grown 7.5%
(CAGR) over the last 5 years.
Ranked 3rd in India in the food processing industry.
BIL has 30-33% biscuit market share in India, and a reach of 36 lakh retail outlets across
the country.
It has about 2190 employees.
The shareholding pattern is: Promoters-50.8%, FIIs-19.1%, Individuals/HNI-17.2%,
FIs/Insurance-5.6%, MFs-4% and Bodies Corporate 3.3%.
It has a large distribution network reaching ~36 lakh outlets, with more than 40% of the
consumption in rural India.
Economic Times Brand Equity placed BIL among the top 10 trusted brands of India.

Recent Events and Strategies

BIL is adding production capacities, and also reducing the dependence on contract
manufacturing. To manufacture its own products, BIL has spent nearly Rs 300 cr to add
capacities, much of which was earlier outsourced. Three new plants have come up in
Bihar, Odisha and Gujarat. These plus one in TN will take the total plants owned by BIL
to 12. These will take care of 50% of the companys manufacturing needs, with the rest
coming from contract manufacturers.
BIL is planning to set up another wholly owned subsidiary for baked goods in Tamil
Nadu, to serve South Indian markets, at an estimated cost of Rs 100 crores in early 2015.
BIL is also driving innovation across the existing categories and has strengthened its R&D
for this.
Synergies were created through integration of the bakery and dairy sales and distribution
system.
Increased distribution of more high-priced products in urban areas, at the same time
concentrating on rural areas is going to be the companys primary objective for the FY14,
according to companys COO Varun Barry, which should help BIL grow sales by 15% in
FY14.
MD Vinita Bali is set to exit the company in March14 and will be succeeded by COO Mr.
Varun Barry. The latter is already head of the India operations. He is also undertaking a
management restructuring, to make the top team smaller and more focused.

Stock Evaluation, Performance and Returns

The price and dividend history is detailed in fig given below.

Post 2010 BIL has started a sharp uptrend. Investors in BIL over the last 5 years have seen
a return on 25% CAGR on the share price.
In the past 1 year itself, the share has appreciated over 60%.
Revenues have grown at 15.7% of CAGR in the past 4 years. The EBITDA and PAT have
grown at 7.9% and 6.7% respectively in this year.
The EPS has increased by 6.7% CAGR over the last 5 years.
The P/E after FY11 has been in the 26-40 range,
The Price of BIL has been tracking EPS growth.
BIL has just 24 cr. of equity capital; there is a good chance of bonus, split, dividend
increase or other shareholder reward if performance continues to excel.
Debt equity fell from 0.61 (FY13) to 0.3 (Q1FY14), indicating a fast improving Balance
Sheet.
The all-time high of 972 was hit in Oct 2013.

Price History(graph showing continuous increase in price after 2010)

Quarterly Financial