shares overviews of fmcg personal care companies Britannia Industries

Operating profits declined 30 per cent to Rs 43.6 crore. Higher interest cost (due to bonus debentures) and tax rate (due to completion of five years of Uttaranchal factory) dragged net profits by a whopping 55 per cent yearon-year to Rs 23.7 crore, say analysts at ICICI Securities. The tax outflow has been high, at around 25.8 per cent in the June quarter, as compared to 18 per cent in the corresponding period of the previous year.

Britannia reported revenue growth of 24 per cent, most of which was volume-led.

While these are structural issues, the concern for analysts has been the 170-basis-point year-on-year decline in the company’s market share. Analysts point that a premium product portfolio might be taking toll on market share, as the the mid-price segment has seen the highest growth. Subsequently, the market share in the biscuits segment has also declined 500 basis points in the past two years, and stands 30.6 per cent currently. Operating profit levels may improve in the coming quarters, as raw material prices ease. However, they are not expected to rise (currently at four per cent), as competitive pressure in the segment could see higher adspend.

The industry spends an average 14 per cent on advertisements, while Britannia has an ad-spend rate of seven-eight per cent, which could only rise from here.

The company’s valuations are amongst the cheapest in the industry, with an enterprise value of around 1.3 times its sales. A change in the earnings flow and restoration of market share could be the likely triggers for the stock. Till then, the dough would not get baked.
source - business standard

Britannia Industries Ltd (updated - 12 Aug 2010)
The fast moving consumer goods player, Britannia Industries, continues to see tough times. The company managed to see strong revenue growth, but earnings and profitability deteriorated. Higher input costs, interest charges and increased taxation were the culprits.

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Despite sequential improvement in margins, analysts are not too optimistic about the company’s prospects, as competition turns intense from foreign (United Biscuits and Kraft) and domestic (ITC, Parle and Glaxo) players, in addition to the regional local brands. Domestic players are introducing premium biscuits at lower price points, besides launching new products or variants, which will challenge the company’s leadership in the category.

Though Britannia is expected to record double-digit sales growth, led by robust volume growth and higher realisation, margins will remain under pressure due to higher advertising expenditure and limited pricing power. The only relieving factor will be benign raw material prices (sugar and wheat that accounts for 83 per cent of raw material cost in volumes). At `414.1, the stock trades at 23 times 2011-12 estimated earnings.
source - business standard

Britannia Industries Ltd (updated - 16 Nov 2010)
Britannia’s net sales grew 27.2 per cent year-on-year (y-o-y) to `1,097.5 crore during the September quarter. The sales growth has been improving for the past three quarters due to various factors — improved consumer sentiment, robust volume growth (over 20 per cent), a 5-10 per cent price rise in 2009-10, grammage reduction in select biscuits, launch of innovative products and premium biscuits at lower price points ( `5-10 pack) to improve realisations, and above all, a smaller base (two per cent revenue growth in the September 2009 quarter).

This is boiling down to better profitability, despite stiff competition. The company’s operating profit margin improved five per cent sequentially in the September quarter, in sharp contrast to an operating loss of `43 crore reported in the March quarter (first in three years).

However, net profit margin, which rose sequentially in the June quarter, dipped 69 basis points (bps) to 2.9 per cent – the lowest in three years.