Britannia Industries Share Price Could Reach Rs 5,475: Prabhudas Lilladher
Britannia Industries’ Q4FY24 performance underscores a stable margin environment despite moderate topline growth. While rural volumes lag and product premiumization continues, cost savings and strategic innovations have helped preserve profitability. Prabhudas Lilladher reiterates an ‘Accumulate’ rating, emphasizing Britannia’s strong brand equity, steady innovation pipeline, and pricing power in a competitive landscape. However, with demand recovery uneven and valuations elevated, near-term upside remains capped, warranting a cautious yet optimistic investment approach.
Volume Trends Lag; Rural Weakness Continues
Volume growth in Q4FY24 remained flat YoY, reflecting persistent challenges in rural recovery and soft demand in value segments. The company cited tepid trends across hinterland consumption, although pricing actions and product premiumization mitigated the impact on net sales.
Domestic revenue grew 2.2% YoY, supported largely by a richer product mix. Despite soft overall growth, management remains confident that evolving distribution strategies and rural-focused initiatives will yield stronger momentum in upcoming quarters.
Margins Steady Despite Input Pressures
EBITDA margin for Q4FY24 stood at 18.8%, slightly lower YoY but flat QoQ, indicating the firm’s ability to absorb inflationary shocks. Gross margin declined 140 bps QoQ to 42.4% as input cost pressures from milk and wheat offset benefits from structural cost savings.
Operating profit rose 3.5% YoY to Rs 798 crore, aided by cost optimization programs and controlled ad spends. Britannia continues to exercise operational discipline while investing judiciously in growth avenues.
Profitability Remains Robust
Net profit for the quarter increased by 3.3% YoY to Rs 535 crore, aligning with expectations. Earnings were supported by stable operating margins, lower interest outflows, and a benign tax rate environment.
EPS for Q4FY24 stood at Rs 22.2, reflecting healthy cash generation and earnings resilience despite muted topline dynamics.
Key Financial Highlights
Below is the financial snapshot for Britannia Industries as per the Q4FY24 report:
| Particulars (Rs Cr) | Q4FY24 | Q4FY23 | YoY % |
|---|---|---|---|
| Revenue | 4,251 | 4,162 | 2.2% |
| EBITDA | 798 | 771 | 3.5% |
| EBITDA Margin | 18.8% | 18.5% | +30 bps |
| Net Profit | 535 | 518 | 3.3% |
| EPS (Rs) | 22.2 | 21.5 | 3.3% |
Valuation Remains Elevated
Britannia trades at 49.3x FY25E EPS and 43.6x FY26E EPS, reflecting premium valuations within the FMCG space. While the brand’s defensiveness justifies such multiples, near-term upside is restrained unless rural demand accelerates meaningfully.
The revised target price of Rs 5,475 implies limited upside from current levels, suggesting that investors may accumulate on dips with a medium-term horizon.
Key Investment Triggers
- Strong brand portfolio: Britannia remains a household name with a loyal consumer base across urban and rural markets.
- Premiumization efforts: Innovations in health, indulgence, and dairy segments are driving mix upgrades.
- Cost rationalization: Backward integration, network optimization, and structural savings continue to aid profitability.
- Management confidence: Capex for new manufacturing plants and expanding distribution reflect bullish internal outlook.
Risks to Monitor
1. Rural demand stagnation: Slow recovery across Tier 2 and Tier 3 towns may delay volume uptick.
2. Input cost volatility: Commodity fluctuations (especially palm oil, milk) could pressure gross margins.
3. Regulatory risks: Any price control on essential food categories may impact pricing freedom.
Brokerage View and Stock Levels
Prabhudas Lilladher has maintained an ‘Accumulate’ call with a 12-month target price of Rs 5,475. The current market price (CMP) stands at Rs 5,134. The stock trades at a forward P/E of 49.3x FY25E.
Support levels are seen at Rs 5,020, while resistance lies near Rs 5,300. A breakout above Rs 5,300 could see the stock retest its 52-week high in the medium term.
Conclusion: Accumulate on Dips
While near-term volume growth may be tepid, Britannia’s robust brand equity, margin discipline, and premiumization strategy make it a resilient FMCG play. Valuations remain elevated, but earnings stability and strong management execution justify a medium-term positive stance.
Disclaimer: Investors are advised to conduct their own due diligence and consult financial advisors before making any investment decisions.
