Britannia Industries share price: Neutral on Britannia Industries, target price Rs 3715: Motilal Oswal

Motilal Oswal has given a neutral rating to Britannia Industries with a target price of Rs 3715. The share price moved down by 1.17 per cent from its previous close of Rs 3551.50. The stock’s last traded price is Rs 3510.

Britannia Industries Ltd., incorporated in the year 1918, is a Large Cap company (having a market cap of Rs 83654.56 Crore) operating in FMCG sector.

For the quarter ended 30-09-2020, the company reported a Consolidated sales of Rs 3354.35 Crore, down 0.89 % from last quarter Sales of Rs 3384.46 Crore and up 10.96 % from last year same quarter Sales of Rs 3022.91 Crore. The Company reported net profit after tax of Rs 495.09 Crore in latest quarter.

Investment Rationale
The brokerage maintains Neutral rating on account of various factors: (a) expensive valuations at 45.4x FY22, (b) sustained growth in group inter-corporate deposits (ICDs) – now at around INR7b (v/s INR6b at end-FY20 when they crossed their own erstwhile stated threshold of INR5b), (c) an uncertain earnings outlook beyond FY21, and (d) likely impact on ROCEs going ahead despite very strong earnings growth in FY21 due to increased capex and the continued presence of high cash and debt levels on the books.

Promoter/FII Holdings
Promoters held 50.6 per cent stake in the company as of Sept 30, 2020 while FIIs held 16 per cent, DIIs 11.5 per cent and public and others 21.9 per cent.

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