BRIT in 05Feb21

Result Update Institutional Research

India I Consumer

08 February, 2021 Britannia Industries Ltd BUY Price: Rs3,542 Target Price: Rs4,409

Diversification of consumer choices impact volume Forecast return: 24%

Britannia’s Q3FY21 performance was below expectations. Given diversification of Market Data consumer choices consol. revenue/EBITDA/PAT grew 6.1%/ 21.8%/ 22.3% led by healthy Bloomberg: BRIT IN growth in traditional trade and rural markets, while modern trade and institutional 52 week H/L: 4,015/2,100 business (~10% each) witnessed moderate recovery. After a stellar 1HFY21 performance, Market cap: Rs853.1bn the company has shifted its focus on strategic planks, (1) grow distribution, (2) cut costs, (3) build innovation pipeline, (4) nurture adjacent business, and (5) strive for sustainable and Shares Outstanding: 240.9mn profitable growth. We reckon, emphasis on under indexed Hindi speaking rural markets Free float: 22.4% helped in gaining market share. The company delivered all time high gross margin at 43.9% Avg. daily vol. 3mth: 805,840 (+242bps), whist, despite high employee cost and other expenses the EBITDA expanded Source: Bloomberg 21.8% resulting in EBITDA margin at 19.3%. PAT rose to Rs4.6bn (+22.3%). We maintain Changes in the report FY21E/FY22E earnings and introduce FY23E estimates. We retain Buy rating with DCF-based Rating: Unchanged revised target price of Rs4,409 (implying 46x FY23E EPS). Changed to Target price: Continued focus on Strategic planks as demand conditions return to normalcy Rs4,409 from Rs4.273 EPS: FY23E (95.1) Britannia delivered lower than expectation consol. revenue at Rs31.7bn (+6.1%). Domestic Source: Centrum Research estimates business saw 5.3% growth backed by ~4% growth in volumes. Management cited, traditional trade and buoyancy in rural markets saw faster growth, yet modern trade and institutional Shareholding pattern business was muted given lower footfall in stores, offices, schools and rail services. Dec-20 Sep-20 Jun-20 Mar-20 Management said, after excellent 1HFY21, it has shifted focus back to its growth agenda Promoter 50.6 50.6 50.6 50.6 driven by (1) strengthening distribution/marketing spends (2) cut costs (3) accelerate pace of FIIs 17.7 16.0 14.7 14.7 innovation (4) driving adjacent business and (5) strive for sustainable growth through IT DIIs 10.5 11.2 12.4 13.1 transformation project SAP Hana. We believe these efforts will enable the company to deliver Public/other 21.3 22.2 22.3 21.6 its ambition to become a “total food company”. Further, focus on direct coverage (2.29mn) Source: BSE and rural distributors (23K) could aid revenues and market share gains in Hindi region. Centrum estimates vs Actual results Continue to sustain the COVID efficiencies YE Mar Centrum Actual Variance Company reported all time high gross margin at 43.9% (+242bps) YoY led by healthy product (Rs mn) Q3FY20 Q3FY20 (%) mix, and moderate inflation (~3-4%). Though key RM saw rise, RPO (+25%) and sugar (+1%), Revenue 32,625 31,656 (3.0) wheat flour (-7%) and milk (-15%) reported decline. EBITDA expanded at 21.3% YoY, despite EBITDA 6250 6,115 (2.2) increase in employee cost (+8.4%), other exp. (+4.4%) resulting in EBITDA margin at 19.3% EBITDA margin 19.2 19.3 10bps (+250bps). Management alluded large part of the efficiency gains led by (1) better factory Adj.(%) net profit 4,749 4,558 (4.0) productivity (2) lower wastage 0.7x (3) 50%+ more direct dispatch to trade and (4) operating Source: Bloomberg, Centrum Research estimates leverage. However, we expect rise in ad-spends could weigh on margins going forward. Key highlights from management commentary (1) International business growing at healthy pace led by Middle East and Africa (2) return of train travel could see jump in out-of-home consumption (3) setting up greenfield operations in TN (capex of Rs4bn), whilst UP plant could come up in 18 months (4) Ranjangaon total capex Rs15bn and (5) Upgrade in IT/ERP systems will benefit distributor sales management and vendor management directly, yet it would also help in better inventory planning. Valuation and Risks We believe improved operating performance and strong execution capabilities provide healthy returns to long-term investors. Moreover, considering 9MFY21 performance and demand outlook we maintain FY21E/FY22E earnings and introduce FY23E estimates. We retain Buy rating with DCF-based revised TP Rs.4,409 (implying 46x FY23E EPS). Risks to our call include rising input costs, abrupt competition and unsecured loans to promoter group. Financial and valuation summary YE Mar (Rs mn) 3QFY21A 3QFY20A YoY (%) 2QFY21A QoQ (%) FY21E FY22E FY23E Revenues 31,656 29,827 6.1 34,191 (7.4) 128,885 140,891 156,186 EBITDA 6,115 5,020 21.8 6,754 (9.5) 23,012 25,534 28,646 EBITDA margin (%) 19.3 16.8 250bps 19.8 (50bps) 17.6 17.9 18.1 Adj. Net profit 4,558 3,726 22.3 4,987 (8.6) 17,988 20,153 22,884 Adj. EPS (Rs) 18.8 15.4 22.1 20.6 (8.7) 74.8 83.8 95.1 EPS growth (%) 28.3 12.0 13.6 PE (x) 46.4 41.5 36.5 Consumer EV/EBITDA (x) 37.7 33.5 28.6 PBV (x) 15.9 13.0 10.8 Shirish Pardeshi RoE (%) 36.9 33.9 31.8 Analyst, Consumer

RoCE (%) 29.3 28.0 27.3 +91-22-4215 9634 Source: Company, Centrum Broking [email protected]

Please see Disclaimer for analyst certifications and all other important disclosures. Britannia Industries Ltd 08 February, 2021 Thesis Snapshot

Estimate revisions Valuations FY21E FY21E FY22E FY22E YE Mar (Rs mn) % chg % chg We believe improved operating performance and strong execution New Old New Old capabilities provide healthy returns to long-term investors. Moreover, Revenue 1,28,885 1,28,885 0.0 1,40,891 1,40,891 0.0 considering 9MFY21 performance and demand outlook we maintain EBITDA 23,012 23,012 0.0 25,534 25,534 0.0 FY21E/FY22E earnings and introduce FY23E estimates. We retain Buy rating EBITDA margin 17.6 17.6 0 bps 18.3 18.3 0 bps with DCF-based revised TP Rs.4,409 (implying 46x FY23E EPS). Risks to our call include rising input costs, abrupt competition and unsecured loans to Adj. PAT 17,988 17,988 0.0 20,153 20,153 0.0 promoter group companies. Diluted EPS (Rs) 74.8 74.8 0.0 83.8 83.8 0.0 Source: Centrum Broking Valuations Rs/share DCF-based target price Rs4,409 Britannia Industries versus NIFTY 50 WACC (%) 9.3 1m 6m 1 year Terminal growth (%) 6.0 BRIT IN (0.9) (10.0) 8.9

NIFTY 50 4.0 33.1 23.4 P/E mean and standard deviation Source: Bloomberg, NSE 70 60 Key assumptions 50 YE Mar FY21E FY22E 40 Domestic Volume growth 10.5 7.8 30 Domestic Price/Mix growth 2.1 1.5 20 Gross Margin 41.7 41.8 10 Employee costs as % of Sales 4.1 4.0

Other expenses as % of Sales 19.7 19.6

Feb-12 Feb-13 Feb-14 Feb-15 Feb-16 Feb-17 Feb-18 Feb-19 Feb-20 Feb-21

Aug-12 Aug-17 Aug-13 Aug-14 Aug-15 Aug-16 Aug-18 Aug-19 Aug-20 Tax rate 22.2 22.2 P/E Mean Source: Centrum Broking Mean + Std Dev Mean - Std Dev Mean + 2 Std Dev

EV/EBITDA mean and standard deviation 53 45 37 29 21 13

5

Feb-13 Feb-19 Feb-12 Feb-14 Feb-15 Feb-16 Feb-17 Feb-18 Feb-20 Feb-21

Aug-15 Aug-12 Aug-13 Aug-14 Aug-16 Aug-17 Aug-18 Aug-19 Aug-20 EV/EBITDA Mean Mean + Std Dev Mean - Std Dev Mean + 2 Std Dev

Source: Bloomberg, Centrum Broking

Peer Comparison Mkt Cap CAGR FY20-FY22E (%) PE (x) EV/EBITDA (x) RoE (%) Company Rs bn Sales EBIDTA PAT FY20 FY21E FY22E FY20 FY21E FY22E FY20 FY21E FY22E Britannia 836.2 11.0 17.7 19.9 59.6 46.4 41.5 47.6 37.7 33.5 32.4 36.9 33.9 HUL 5,256.1 15.1 19.2 21.9 69.9 57.2 51.0 52.9 40.3 36.6 88.4 32.2 20.8 Dabur 915.5 8.3 13.7 13.4 59.5 52.9 46.3 53.8 46.8 40.5 25.2 24.3 24.0 Colgate-Palmolive 432.2 4.0 7.2 6.9 53.0 50.6 46.3 36.2 33.1 31.2 53.7 52.1 53.9 Emami 224.5 7.7 16.3 15.4 43.5 35.3 32.2 27.8 21.8 19.3 26.9 33.0 32.1 Bajaj consumer 38.9 4.8 18.0 15.9 21.1 17.7 15.7 15.9 12.1 9.9 33.0 29.5 26.4 Source: Company, Centrum Broking

Centrum Institutional Research 2 Britannia Industries Ltd 08 February, 2021

Exhibit 1: Centrum Quarterly Monitor Q2FY21 Q3FY21 Our Comments

Demand On the demand front the management Management witnessed resilient We believe Britannia will continue to benefit Environment highlighted that consumer spending demand in general trade and rural from improving out-of-home consumption which was earlier concentrated towards markets, however MT and Institutional and institutional business going forward with essentials is now evening out /getting sales was muted. Rising demand for its return of normalcy as offices, schools and diversified. Moreover, there is a pent up large categories (Biscuits, rusk, cakes, high traffic channel opens. demand for non-essentials and and cheese). consumer down-trading is visible. Outlook and Management says that their product Management expects the growth We reckon pace of growth for the packed Guidance category provides the cheapest snacking trajectory to normalise as normalcy foods segment slowed in Dec’20 as option to the customer and their returns. Hence it would now focus on consumers have tried different snaking intention is to acquire more share in the innovation pipeline and launch new options. Yet expect induced trials during the snacking category midst the trend products. In addition, it is looking for pandemic has added new consumers to the towards down trading. capacity expansion in TN/ UP soon. base who will continue eating healthy food. International Middle East and Africa posted decent Middle East saw healthy growth driven The impact of COVID has impacted pace of Business growth, while the rest of international by adjacencies. The rest of international growth, with normalcy approaching faster witnessed very healthy growth. growing in line of company growth. growth across the markets picking up. We believe BRIT will benefit from the pent up demand for packed food in its international markets. New Products NPDs contributed 4-4.5% of the Company launched Treat Cream wafer We see management’s focus to grow its new revenues. at Rs5 special packs for Diwali festival, product pipeline to create new winning and Pure Magic Chocolush with categories for the company as a positive Hazelnut. Croissants and Salty snacks move turning into a total foods company. continue to be in the text market stage. On Margins and Company reported all time high gross Gross margin expanded further to 43.9% We expect gross margin expansion for Exceptional Items margin at 43.3% (+283bps YoY) due despite ~4% inflation in raw material, Britannia likely to continue driven by (1) cost healthy product mix, lower consumer led by (1) Favourable product mix; (2) rationalisation (2) favourable product mix, (3) promotion and moderate inflation (+3%- few price increases. expected price increases and (4) reduction in 4%). EBITDA margin expanded to 19.8% wastage. EBITDA margin may taper as the (+361bps) despite increase in employee advertising could increase in our view. cost (+8.8%), other exp (+5.8%) as the company sustained a large part of the efficiency gains witnessed in the previous quarter led by (1) better factory productivity (2) lower wastage (3) 50% more direct dispatch from factories (supply chain efficiency) and (4) operating leverage.

Source: Company Data, Centrum Broking

Centrum Institutional Research 3

Britannia Industries Ltd 08 February, 2021 Conference call highlights Revenue & Distribution . Britannia reported muted consolidated net operating income growth of 6.1% with domestic revenue growing at 5.3% driven by ~4% volumes. Volume growth for adjacencies was higher than core biscuit portfolio at 10%. Non-biscuit portfolio contributes ~25% of the revenue. Dairy milk shakes have been impacted by lower OOH consumption. However, rusk and cheese have grown aversively. . Buoyancy in Rural markets continued to grow ahead of urban in Q3, led by near normal economic activity better crop output. Moreover, Hindi speaking belt of Rajasthan, MP, UP and Gujrat saw better growth profile delivering double digit growth in revenues and market share gains. . Revenue growth trends: (1) Diversification of purchase basket as consumer’s transition to a normal life (2) traditional trade and rural saw robust growth (3) MT is not gaining traction for most product categories also saw impact from Future group issues (4) management expect change in sentiments once MT returns to normalcy and railway traffic start showing revival (5) company witnessed a higher growth in October and November, yet December saw weak demand. . MT and institutional business contribute each 10% to revenues affected due to lower footfall as schools and colleges were closed. . Ecommerce saw higher growth, yet its contribution is still under indexed at 1.5%. . On the demand front the management cited diversification of purchase basket as consumers’ transition to a normal life. Moreover, the pent up demand seen Q1 for staples and packaged food essentials is waning away as consumer has more options for snacking. However, management says biscuit is basic protein diet provides the cheapest snacking option to the customer could see resilient demand going forward. . Britannia’s direct reach has increased to 2.29mn outlets in Q3 and rural distributors now increased to 23k. New product launches . We believe new product contribution remained !4% to net sales. . Management comments on adjacencies: . Dairy: expected to be commercialized by FY22-23. Yet cheese would drive growth. . Milk shakes/ drinks: growth has been hit due to muted footfall and lower out-of- home consumption as schools and colleges are still closed. . Cakes: likely to perform better as company has introduced Rs 5 price point driving GT and higher salience in MT, railways, which are currently highly impacted. . Rusk: Delivering aggressive growth . Middle East and Africa posted healthy growth, while the rest of international witnessed very pick up in revenues. Margin . Company reported all time high gross margin at 43.9% (+242bps) YoY due to better product mix and limited discounting and moderate inflation (+4%). Key raw materials: RPO (+25%), Sugar (+1%), yet wheat flour declined (-7%) and milk (-17%). . EBITDA margin expanded to 19.3% (+250bps) despite increase in employee cost (+8.4%), other expenses (+4.4%) as the company sustained a large part of the efficiency gains witnessed in COVID times led by (1) better factory productivity 1.1x (2) lower wastage 0.7x (3) 50% more direct dispatch from factories (supply chain efficiency) and (4) operating leverage. . Adj. PAT grew 22.3% to Rs4.56bn, led by higher other income (+27%).

Centrum Institutional Research 4 Britannia Industries Ltd 08 February, 2021

Key Interventions . During Q3FY21 company focused on range selling with non-biscuit products driving revenues. . The company has increased ad-spends returning to normalcy after ~6 months off air. . In Q2 rusk and bread portfolio saw better demand from end consumers could be because of unorganised players exiting markets. Going forward the company expect to rationalize capacity created through contract packers. . Management said, it will incur Rs4bn capex in FY21. It has already invested Rs7bn in Ranjangaon and it would require total capex of Rs15bn. Further it would invest Rs3.5bn towards greenfield operation in UP which could come up in next 18 months. The company is also exploring a contract packing opportunity in Africa. Others . Company has come back to normal inventory with the distributor, however it is upgrading its DMS software which could help better inventory management. . Company has scaled down it capex plan yet believes it needs capex of Rs8-10bn expected over FY21 and FY22 for setting up these plants. . Modern Trade and institutional business contribute each 10% to revenues, except to see sharp revival

Centrum Institutional Research 5 Britannia Industries Ltd 08 February, 2021

Exhibit 2: Quarterly standalone net revenue growth - YoY

27.0 24.5 24.0 21.0 18.0 14.9 14.6 14.0 15.0 13.2 12.0 11.6 % 12.0 10.3 7.8 9.0 7.2 6.8 5.3 6.0 3.1 3.0 -0.1 0.0

-3.0

Q1FY19 Q2FY21 Q2FY18 Q3FY18 Q4FY18 Q2FY19 Q3FY19 Q4FY19 Q1FY20 Q2FY20 Q3FY20 Q4FY20 Q1FY21 Q3FY21

Source: Company Data, Centrum Broking

Exhibit 3: Quarterly consol. volume growth - YoY

24.0 21.5 21.0

18.0

15.0 13.0 12.0 12.0 11.0

% 12.0 9.0 9.0 7.0 7.0 6.0 6.0 4.0 3.0 3.0 3.0 2.0 0

0.0

Q1FY20 Q3FY18 Q4FY18 Q1FY19 Q2FY19 Q3FY19 Q4FY19 Q2FY20 Q3FY20 Q4FY20 Q1FY21 Q2FY21 Q3FY21 Q2FY18 Source: Company Data, Centrum Broking

Exhibit 4: Consol. Gross margin and EBITDA margin trend

50 45 40 35 30 25 20 15 10 Biscuit Market Share 5

0

Q4FY18 Q2FY19 Q3FY18 Q1FY19 Q3FY19 Q4FY19 Q1FY20 Q2FY20 Q3FY20 Q4FY10 Q1FY21 Q2FY21 Q3FY21

Gross margin EBITDA Margin

Source: Company Data, Centrum Broking

Centrum Institutional Research 6 Britannia Industries Ltd 08 February, 2021

Exhibit 5: Consol. Other expenses (% of revenue) trend

23

21

19

17

15

Q3FY18 Q4FY18 Q1FY19 Q2FY19 Q3FY19 Q4FY19 Q1FY20 Q2FY20 Q3FY20 Q4FY10 Q1FY21 Q2FY21 Q3FY21

Other expenses

Source: Company Data, Centrum Broking

Exhibit 6: Direct reach

2.5 2.22 2.23 2.29 2.10 1.97 2.0 1.8

mn 1.6 - 1.5 1.3 1.0 1.0

0.7 No. No. of outlets 0.5

0.0

FY17 FY14 FY15 FY16 FY18 FY19

Sep'20

Feb,20

Dec'20 Mar'20

Source: Company Data, Centrum Broking

Centrum Institutional Research 7 Britannia Industries Ltd 08 February, 2021

Exhibit 7: Increase in rural distributors 28,000 23,000 24,000 22,000 21,000 20,000 18,100

16,000 14,400

12,000 10,000 8,000

8,000 6,600 No No of distributors 4,000

0

FY16 FY17 FY18 FY15 FY19

Feb'20 Sep'20 Dec'20

Source: Company Data, Centrum Broking

Exhibit 8: Market leadership strengthened

Biscuit Market Share (%)

FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 Dec'20 Britannia Parle Source: Company Data, Centrum Broking

Centrum Institutional Research 8 Britannia Industries Ltd 08 February, 2021

Exhibit 9: Quarterly Financial Summary Particulars (Rs mn) Q4FY19 Q1FY20 Q2FY20 Q3FY20 Q4FY20 Q1FY21 Q2FY21 Q3FY21 Net Sales 27,640 26,773 30,229 29,360 28,078 33,845 33,544 31,061 Other Operating Income 350 230 259 467 599 362 648 595 Total Income 27,990 27,004 30,488 29,827 28,677 34,207 34,191 31,656 Accretion to Stocks in trade & work in progress 189 (204) 56 (148) 1,126 241 (1,090) 218 Raw Material Consumed 13,794 13,676 15,600 15,801 13,631 17,758 18,125 15,453 Purchase of Stock-in-Trade 2,476 2,619 2,586 1,989 2,543 1,960 2,617 2,344 Employee Expenses 1,082 1,206 1,236 1,216 1,209 1,370 1,345 1,318 Other Exp 6,083 5,760 6,089 5,949 5,625 5,709 6,441 6,209 Operating Profit (Core EBITDA) 4,366 3,947 4,922 5,020 4,543 7,169 6,754 6,115 Depreciation 469 448 449 467 485 480 485 486 EBIT 4,835 4,394 5,371 5,487 5,028 7,649 7,239 6,601 Interest 13 101 161 237 270 256 298 318 Other Income 618 675 682 652 786 937 735 826 Other Excep. Items (restructuring, asset sales etc) (22) (161) 15 8 20 (9) (27) (10) Profit Before Tax 4,502 4,072 4,994 4,969 4,574 7,370 6,706 6,137 Tax 1,557 1,430 955 1,273 849 1,944 1,750 1,611 Tax rate (%) 34.6 35.1 19.1 25.6 18.6 26.4 26.1 26.2 Profit After Tax 2,946 2,642 4,038 3,696 3,725 5,427 4,956 4,526 Less: Minority interest in income (30) 24 15 28 24 30 29 31 Add/(Less) - Share in the profit/(loss) of associates (3) 0 0 3 1 1 1 0.2 Profit/(loss) from discontinued ops ------PAT attributable to Consolidated Group 2,891 2,505 4,069 3,734 3,770 5,449 4,960 4,548 Adjusted PAT for the group 2,913 2,666 4,053 3,726 3,750 5,458 4,987 4,558 Growth (%) Net Sales 10.1 5.9 5.9 3.8 1.6 26.4 11.0 5.8 EBITDA 9.9 1.4 8.3 11.1 4.1 81.7 37.2 21.8 Adj. PAT 10.5 3.4 33.7 24.4 28.7 104.7 23.0 22.3 Margin (%) Gross Margin 41.7 40.8 40.5 41.5 40.5 42.1 43.3 43.9 EBITDA 15.8 14.7 16.3 17.1 16.2 21.2 19.8 19.3 EBIT 14.1 13.1 14.8 15.5 14.5 19.8 18.3 17.8 Adj. PAT 10.5 10.0 13.4 12.7 13.4 16.1 14.6 14.4 Cost break up (%) COGS 58.8 59.6 59.8 59.1 60.3 58.3 57.5 58.9 Employee costs 3.9 4.5 4.1 4.1 4.2 4.0 3.9 4.2 Other expenses 21.7 21.3 20.0 19.9 19.6 16.7 18.8 19.6

Source: Company Data, Centrum Broking

Centrum Institutional Research 9 Britannia Industries Ltd 08 February, 2021

P&L Balance sheet YE Mar (Rs mn) FY19A FY20A FY21E FY22E FY23E YE Mar (Rs mn) FY19A FY20A FY21E FY22E FY23E Revenues 109,735 114,440 128,885 140,891 156,186 Equity share capital 240 241 241 241 241 Operating Expense 78,967 82,781 91,356 99,711 110,361 Reserves & surplus 42,292 43,788 53,358 65,091 78,352 Employee cost 4,418 4,867 5,303 5,693 6,357 Shareholders fund 42,533 44,028 53,599 65,332 78,593 Others 9,827 9,915 11,004 12,011 13,187 Minority Interest 327 357 442 528 614 EBITDA 17,334 18,432 23,012 25,534 28,646 Total debt 1,380 15,299 15,149 14,999 14,849 Depreciation & Amortisation 1,619 1,848 2,077 2,071 2,289 Non Current Liabilities 387 439 494 540 599 EBIT 15,715 16,584 20,934 23,463 26,357 Def tax liab. (net) (99) (69) (69) (69) (69) Interest expenses 91 769 1,043 1,022 1,196 Total liabilities 44,528 60,054 69,616 81,330 94,586 Other income 2,065 2,794 3,335 3,570 4,364 Gross block 20,457 24,593 25,374 26,472 28,212 PBT 17,689 18,609 23,226 26,010 29,525 Less: acc. Depreciation (5,025) (7,345) (9,423) (11,494) (13,783) Taxes 6,125 4,507 5,152 5,771 6,555 Net block 15,432 17,247 15,951 14,978 14,429 Effective tax rate (%) 34.6 24.2 22.2 22.2 22.2 Capital WIP 1,012 396 396 396 396 PAT 11,564 14,102 18,074 20,239 22,970 Net fixed assets 17,748 19,033 17,736 16,763 16,214 Minority/Associates (46) (86) (86) (86) (86) Non Current Assets 1,858 3,455 3,804 4,095 4,465 Recurring PAT 11,518 14,016 17,988 20,153 22,884 Investments 7,411 18,989 18,989 18,989 18,989 Extraordinary items 0 (119) 0 0 0 Inventories 7,814 7,410 8,371 9,059 9,949 Reported PAT 11,518 13,897 17,988 20,153 22,884 Sundry debtors 3,942 3,204 4,061 4,481 4,924 Cash & Cash Equivalents 8,597 11,316 20,692 32,460 45,182 Ratios Loans & advances 14,910 14,820 16,691 18,246 20,226 YE Mar FY19A FY20A FY21E FY22E FY23E Other current assets 0 0 0 0 0 Growth (%) Trade payables 11,405 11,163 12,835 14,132 15,796 Revenue 11.6 4.3 12.6 9.3 10.9 Other current liab. 4,383 5,098 5,741 6,276 6,957 EBITDA 15.4 6.3 24.8 11.0 12.2 Provisions 1,965 1,913 2,154 2,355 2,610 Adj. EPS (42.7) 21.6 28.3 12.0 13.6 Net current assets 17,510 18,577 29,086 41,483 54,918 Margins (%) Total assets 44,528 60,054 69,616 81,330 94,586 Gross 40.9 40.8 41.7 41.8 41.9 EBITDA 15.7 15.9 17.6 17.9 18.1 Cashflow EBIT 14.2 14.3 16.0 16.4 16.6 YE Mar (Rs mn) FY19A FY20A FY21E FY22E FY23E Adjusted PAT 10.4 12.1 13.8 14.1 14.4 Profit Before Tax 17,689 18,439 23,226 26,010 29,525 Returns (%) Depreciation & Amortisation 1,619 1,848 2,077 2,071 2,289 ROE 30.1 32.4 36.9 33.9 31.8 Net Interest (1,277) (999) (1,318) (1,835) (2,434) ROCE 29.0 28.3 29.3 28.0 27.3 Net Change – WC (25) 1,274 (1,427) (874) (1,024) ROIC 33.4 29.7 33.4 37.4 41.5 Direct taxes (5,961) (5,033) (5,152) (5,771) (6,555) Turnover (days) Net cash from operations 11,558 14,845 17,407 19,601 21,801 Gross block turnover ratio (x) 5.4 4.7 5.1 5.3 5.5 Capital expenditure (3,994) (2,434) (781) (1,098) (1,740) Debtors 12 11 10 11 11 Acquisitions, net 0 0 0 0 0 Inventory 40 40 37 38 37 Investments (5,730) (14,158) (6,322) (9,000) 0 Creditors 59 59 57 59 59 Others 1,169 1,276 2,361 2,857 3,630 Net working capital 58 59 82 107 128 Net cash from investing (8,555) (15,316) (4,742) (7,241) 1,890 Solvency (x) FCF 3,003 (471) 12,665 12,360 23,691 Net debt-equity (0.2) 0.1 (0.1) (0.3) (0.4) Issue of share capital 530 360 0 0 0 Interest coverage ratio 190.7 24.0 22.1 25.0 24.0 Increase/(decrease) in debt (419) 4,925 (150) (150) (150) Net debt/EBITDA (0.4) 0.2 (0.2) (0.7) (1.1) Dividend paid (3,544) (4,325) (8,418) (8,420) (9,623) Per share (Rs) Interest paid (94) (380) (1,043) (1,022) (1,196) Adjusted EPS 47.9 58.3 74.8 83.8 95.1 Others 0 0 0 0 0 BVPS 177.0 183.1 222.8 271.6 326.7 Net cash from financing (3,527) 579 (9,610) (9,592) (10,969) CEPS 54.7 66.0 83.4 92.4 104.6 Net change in Cash (524) 109 3,054 2,768 12,722 DPS 15.0 35.0 35.0 40.0 45.0 Source: Company, Centrum Broking Dividend payout (%) 31.3 60.6 46.8 47.8 47.3 Valuation (x) P/E 73.9 59.6 46.4 41.5 36.5 P/BV 20.0 19.3 15.9 13.0 10.8 EV/EBITDA 48.7 47.6 37.7 33.5 28.6 Dividend yield (%) 0.4 1.0 1.0 1.1 1.3 Source: Company, Centrum Broking

Centrum Institutional Research 10 Britannia Industries Ltd 08 February, 2021

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No representation is made that this report is accurate or complete. The opinions and projections expressed herein are entirely those of the author and are given as part of the normal research activity of Centrum Broking and are given as of this date and are subject to change without notice. Any opinion estimate or projection herein constitutes a view as of the date of this report and there can be no assurance that future results or events will be consistent with any such opinions, estimate or projection. This document has not been prepared by or in conjunction with or on behalf of or at the instigation of, or by arrangement with the company or any of its directors or any other person. Information in this document must not be relied upon as having been authorized or approved by the company or its directors

Centrum Institutional Research 11 Britannia Industries Ltd 08 February, 2021 or any other person. Any opinions and projections contained herein are entirely those of the authors. None of the company or its directors or any other person accepts any liability whatsoever for any loss arising from any use of this document or its contents or otherwise arising in connection therewith. Centrum and its affiliates have not managed or co-managed a public offering for the subject company in the preceding twelve months. Centrum and affiliates have not received compensation from the companies mentioned in the report during the period preceding twelve months from the date of this report for service in respect of public offerings, corporate finance, debt restructuring, investment banking or other advisory services in a merger/acquisition or some other sort of specific transaction. As per the declarations given by them, Mr. Shirish Pardeshi & Mr. Shubham Aggarwal, research analyst and and/or any of their family members do not serve as an officer, director or any way connected to the company/companies mentioned in this report. Further, as declared by them, they are not received any compensation from the above companies in the preceding twelve months. They do not hold any shares by them or through their relatives or in case if holds the shares then will not to do any transactions in the said scrip for 30 days from the date of release such report. Our entire research professionals are our employees and are paid a salary. They do not have any other material conflict of interest of the research analyst or member of which the research analyst knows of has reason to know at the time of publication of the research report or at the time of the public appearance. While we would endeavour to update the information herein on a reasonable basis, Centrum, its associated companies, their directors and employees are under no obligation to update or keep the information current. Also, there may be regulatory, compliance or other reasons that may prevent Centrum from doing so. Non-rated securities indicate that rating on a particular security has been suspended temporarily and such suspension is in compliance with applicable regulations and/or Centrum policies, in circumstances where Centrum is acting in an advisory capacity to this company, or any certain other circumstances. This report is not directed to, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation or which would subject Centrum Broking Limited or its group companies to any registration or licensing requirement within such jurisdiction. Specifically, this document does not constitute an offer to or solicitation to any U.S. person for the purchase or sale of any financial instrument or as an official confirmation of any transaction to any U.S. person unless otherwise stated, this message should not be construed as official confirmation of any transaction. No part of this document may be distributed in Canada or used by private customers in United Kingdom. The information contained herein is not intended for publication or distribution or circulation in any manner whatsoever and any unauthorized reading, dissemination, distribution or copying of this communication is prohibited unless otherwise expressly authorized. Please ensure that you have read “Risk Disclosure Document for Capital Market and Derivatives Segments” as prescribed by Securities and Exchange Board of India before investing in Indian Securities Market.

Ratings definitions Our ratings denote the following 12-month forecast returns:

Buy – The stock is expected to return above 15%. Add – The stock is expected to return 5-15%. Reduce – The stock is expected to deliver -5-+5% returns. Sell – The stock is expected to deliver <-5% returns.

Britannia Industries

Source: Bloomberg

Centrum Institutional Research 12 Britannia Industries Ltd 08 February, 2021

Disclosure of Interest Statement

1 Business activities of Centrum Broking Centrum Broking Limited (hereinafter referred to as “CBL”) is a registered member of NSE (Cash, F&O and Currency Derivatives Limited (CBL) Segments), MCX-SX (Currency Derivatives Segment) and BSE (Cash segment), Depository Participant of CDSL and a SEBI registered Portfolio Manager. 2 Details of Disciplinary History of CBL CBL has not been debarred/ suspended by SEBI or any other regulatory authority from accessing /dealing in securities market.

3 Registration status of CBL: CBL is registered with SEBI as a Research Analyst (SEBI Registration No. INH000001469) Britannia Industries 4 Whether Research analyst’s or relatives’ have any financial interest in the subject company and nature of such financial interest No 5 Whether Research analyst or relatives have actual / beneficial ownership of 1% or more in securities of the subject company at the end of the month No immediately preceding the date of publication of the document. 6 Whether the research analyst or his relatives has any other material conflict of interest No 7 Whether research analyst has received any compensation from the subject company in the past 12 months and nature of products / services for which No such compensation is received 8 Whether the Research Analyst has received any compensation or any other benefits from the subject company or third party in connection with the research No report 9 Whether Research Analysts has served as an officer, director or employee of the subject company No 10 Whether the Research Analyst has been engaged in market making activity of the subject company. No 11 Whether it or its associates have managed or co-managed public offering of securities for the subject company in the past twelve months; No Whether it or its associates have received any compensation for investment banking or merchant banking or brokerage services from the subject company 12 No in the past twelve months; Whether it or its associates have received any compensation for products or services other than investment banking or merchant banking or brokerage 13 No services from the subject company in the past twelve months;

Member (NSE and BSE). Member MSEI (Inactive)

Single SEBI Regn No.: INZ000205331

Depository Participant (DP) CDSL DP ID: 120 – 12200 SEBI REGD NO. : CDSL : IN-DP-CDSL-661-2012

PORTFOLIO MANAGER

SEBI REGN NO.: INP000004383

Research Analyst SEBI Registration No. INH000001469

Mutual Fund Distributor AMFI REGN No. ARN- 147569

Website: www.centrum.co.in Investor Grievance Email ID: [email protected]

Compliance Officer Details: Ashok D Kadambi (022) 4215 9937; Email ID: [email protected]

Centrum Broking Ltd. (CIN :U67120MH1994PLC078125) Corporate Office & Correspondence Address Registered Office Address Centrum House Bombay Mutual Building , 6th Floor, CST Road, Near Vidya Nagari Marg, Kalina, Santacruz (E), 2nd Floor, Dr. D. N. Road, Mumbai 400 098. Fort, Mumbai - 400 001 Tel: (022) 4215 9000 Fax: +91 22 4215 9344

Centrum Institutional Research 13 Britannia Industries Ltd 08 February, 2021

Centrum Broking Institutional Equities Team Details

Nischal Maheshwari CEO [email protected] +91-22-4215 9841 Research Analyst Sector E-mail Phone number Anish Rankawat Auto & Auto Ancillary [email protected] +91-22-4215 9263

Gaurav Jani BFSI [email protected] +91-22-4215 9110 Milind S Raginwar Cement & Metals [email protected] +91-22-4215 9201 Shirish Pardeshi FMCG [email protected] +91-22-4215 9634 Ashish Shah Infra & Aviation [email protected] +91-22-4215 9021

Probal Sen Oil & Gas [email protected] +91-22-4215 9001

Cyndrella Carvalho Pharma [email protected] +91-22-4215 9643

Sparsh Chhabra Economist [email protected] +91-22-4215 9035 Joaquim Fernandes Quant [email protected] +91-22-4215 9363 Equity Sales Designation Email Phone number

Rajesh Makharia Director [email protected] +91-22-4215 9854 Paresh Shah MD [email protected] +91-22-4215 9617

Anil Chaurasia Sr. VP [email protected] +91-22-4215 9631 Amit Kapoor Sr. VP [email protected] +91-22-4215 9980

Himani Sanghavi AVP [email protected] +91-22-4215 9082

Saahil Harwani Associate [email protected] +91-22-4215 9623

Centrum Institutional Research 14