Annual Report Analysis FY20 During FY15-20, Britannia has exhibited remarkable financial performance with Revenue/Net Profit CAGR of 8%/15% respectively. During FY20, the company experienced challenging business environment owing to economic slowdown which was exacerbated by the Covid 19 pandemic. In its Annual Report 2020, Britannia continues to focus on strengthening core brands, launching innovative products, enhancing manufacturing capabilities, investments in R&D and increasing distribution reach. Strengthening Direct Distribution In order to have greater penetration in rural areas and the Hindi heartland, where Parle is the biggest player because of the massive reach of its glucose biscuit, Parle G, Britannia is focusing on direct distribution model. Britannia reached 2.2 mn outlets directly in FY20 (2.1 mn in FY19) and targets to add 200-300K outlets every year. It is commendable that distribution reach got to 100% within first fortnight of the lockdown. Number of distributors in rural increased to ~21K in Feb’20 from 18K in Mar’19. This led to market share gain in Hindi belt in FY20. Sharpening Operating Efficiency In the last five years, Britannia’s operating margins improved 500bps from 10.9% in FY15 to 15.9% in FY20. New innovative products, which account for 2-3% of topline, are gross margin accretive. Also, we expect palm oil and milk prices to ease in the next few quarters. With premiumization and cost efficiency programs, we expect margins to remain 16%+ going ahead. Focus on adjacent categories Britannia aims to increase the share of non-biscuit portfolio in next five years to 50%, from ~15-20% now. Recently, Britannia entered 3 new categories – Salted Snacks, Croissants, Cream Wafers. Snacks category is still in testing phase in South while croissants were launched under the brand ‘Treat’ in select geographies and trade channels. Cream wafers received very encouraging response within a year of its launch. Manufacturing facility for Croissants and Snacks has been set up in Ranjangaon, Maharashtra. Due to consumption slowdown during the beginning of the year followed by Covid-19 disruption, some of these products took a backseat. However, the company would realign its focus on these products as consumer demand revives. Increased momentum in Dairy business Britannia’s Dairy segment is ~Rs 4-5bn constituting ~5% of the turnover. The company is looking to double turnover of its dairy vertical over the next 2-3 years. Britannia focuses on strengthening its core categories such as Cheese and Yoghurt, while innovating in other categories such as Drinks. The launch of Winkin’ Cow Milkshakes received encouraging response. Britannia has been continuously investing in building milk procurement and distribution capabilities while ensuring quality. Company’s milk procurement in Maharashtra has been scaled up to 25,000 Liters/day as Ranjangaon facility goes on-stream. Plan to increase international business contribution Britannia aims to increase the contribution from overseas business from ~5-6% currently to 15% in next 4-5 years. Greenfield plant at Nepal started operations in April 2019. Company is evaluating opportunities to set up a new plant in Bangladesh and other South East Asian Nations. The management aims to add one new international geography annually to strengthen international business. CMP Rs 3,345 Target / Upside Rs 3,782 / 13% BSE Sensex 33,568 NSE Nifty 9,914 Scrip Details Equity / FV Rs 241mn / Rs 1 Market Cap Rs 803bn USD 11bn 52-week High/Low Rs 3,708/ 2,100 Avg. Volume (no) 1,003,880 NSE Symbol BRITANNIA Bloomberg Code BRIT IN Shareholding Pattern Mar'20(%) Promoters 50.6 MF/Banks/FIs 13.1 FIIs 14.7 Public / Others 21.6 Britannia Relative to Sensex VP Research: Sachin Bobade Tel: +91 22 40969731 E-mail: [email protected]Associate: Nikhat Koor Tel: +91 22 40969764 E-mail: [email protected]80 100 120 140 160 180 Jun-19 Jul-19 Aug-19 Sep-19 Oct-19 Nov-19 Dec-19 Jan-20 Feb-20 Mar-20 Apr-20 May-20 Jun-20 BRIT SENSEX Britannia Industries Buy June 17, 2020
Transcript
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During FY15-20, Britannia has exhibited remarkable financial performance with Revenue/Net Profit CAGR of 8%/15% respectively. During FY20, the company experienced challenging business environment owing to economic slowdown which was exacerbated by the Covid 19 pandemic. In its Annual Report 2020, Britannia continues to focus on strengthening core brands, launching innovative products, enhancing manufacturing capabilities, investments in R&D and increasing distribution reach.
Strengthening Direct Distribution In order to have greater penetration in rural areas and the Hindi heartland, where Parle is the biggest player because of the massive reach of its glucose biscuit, Parle G, Britannia is focusing on direct distribution model. Britannia reached 2.2 mn outlets directly in FY20 (2.1 mn in FY19) and targets to add 200-300K outlets every year. It is commendable that distribution reach got to 100% within first fortnight of the lockdown. Number of distributors in rural increased to ~21K in Feb’20 from 18K in Mar’19. This led to market share gain in Hindi belt in FY20.
Sharpening Operating Efficiency In the last five years, Britannia’s operating margins improved 500bps from 10.9% in FY15 to 15.9% in FY20. New innovative products, which account for 2-3% of topline, are gross margin accretive. Also, we expect palm oil and milk prices to ease in the next few quarters. With premiumization and cost efficiency programs, we expect margins to remain 16%+ going ahead. Focus on adjacent categories Britannia aims to increase the share of non-biscuit portfolio in next five years to 50%, from ~15-20% now. Recently, Britannia entered 3 new categories – Salted Snacks, Croissants, Cream Wafers. Snacks category is still in testing phase in South while croissants were launched under the brand ‘Treat’ in select geographies and trade channels. Cream wafers received very encouraging response within a year of its launch. Manufacturing facility for Croissants and Snacks has been set up in Ranjangaon, Maharashtra. Due to consumption slowdown during the beginning of the year followed by Covid-19 disruption, some of these products took a backseat. However, the company would realign its focus on these products as consumer demand revives.
Increased momentum in Dairy business Britannia’s Dairy segment is ~Rs 4-5bn constituting ~5% of the turnover. The company is looking to double turnover of its dairy vertical over the next 2-3 years. Britannia focuses on strengthening its core categories such as Cheese and Yoghurt, while innovating in other categories such as Drinks. The launch of Winkin’ Cow Milkshakes received encouraging response. Britannia has been continuously investing in building milk procurement and distribution capabilities while ensuring quality. Company’s milk procurement in Maharashtra has been scaled up to 25,000 Liters/day as Ranjangaon facility goes on-stream.
Plan to increase international business contribution Britannia aims to increase the contribution from overseas business from ~5-6% currently to 15% in next 4-5 years. Greenfield plant at Nepal started operations in April 2019. Company is evaluating opportunities to set up a new plant in Bangladesh and other South East Asian Nations. The management aims to add one new international geography annually to strengthen international business.
Key Management Mr. Nusli N Wadia, Chairman and Non-Executive Director is retiring by rotation at the ensuing AGM. The BOD has proposed the re-appointment of Mr. Nusli N Wadia for approval of the shareholders at ensuing AGM.
Board of Directors
i) During the year, Mr. Nimesh N Kampani and Mrs. Ranjana Kumar retired from the BOD w.e.f. 12 August 2019. ii) Mr. Avijit Deb, Mr. Keki Dadiseth and Dr. Ajai Puri were reappointed as Independent Directors for another term of 5 years w.e.f. 12 August 2019.
Auditors
Since M/s B S R & Co. LLP, would be completing their term of 10 years as the Statutory Auditors of the Company, they are required to mandatorily retire at the ensuing 101st AGM as per Section 139 of the Companies Act, 2013. The BOD recommended the appointment of M/s Walker Chandiok & Co, Chartered Accountants as Statutory Auditors of the Company, for a period of five consecutive years from the 101st AGM till the conclusion of 106th AGM of the Company to be held in 2025, subject to the approval of shareholders of the company.
Pledged Shares No pledged shares.
Remuneration
There were 4,535 permanent employees on the rolls of Company as on 31 March 2020. Average percentage increase made in the salaries of employees and the managerial Personnel in FY20 on comparable basis was ~8.2% YoY. The median remuneration of employees of the company during FY20 was Rs 3.39 lakhs, up 19.8% YoY.
Credit Ratings
CRISIL has reaffirmed the credit rating of CRISIL AAA and CRISIL A1+ for long term and short term debt instrument/ facilities respectively. ICRA has assigned the credit rating of ICRA A1+ for the Commercial Paper issued by the company on 17 January 2020.
Macroeconomic factors
During the year, Indian economy witnessed significant slowdown impacting consumer demand. The global trade tensions and credit squeeze in domestic market led to muted demand and growth expectations. The unprecedented COVID-19 pandemic in March 2020 added to the woes, with forced lock downs and large-scale disruptions. Lower household consumption and sluggish business activity is expected to result in sharp decline in India’s economic growth in FY21.
Key Holders
Category of Shareholder (%) FY20 FY19
Promoter Holding 50.63 50.66
Mutual Funds 4.99 4.65
Banks/FI 0.31 0.16
Insurance Companies 7.75 7.09
Other DII’s 6.26 6.27
Total DII 19.31 18.17
FII/FPI 14.71 15.75
Others 15.35 15.42
Total 100.00 100.00
Source: Company, DART
June 17, 2020 3
Increase in Inter Corporate Deposits
Inter Corporate Deposits (Rs mn)
Name of Borrower FY2020 FY2019 FY2018 FY2017
Bajaj Finance Limited 3944.1 2642.8 2011.8 1027.5
Kotak Mahindra Prime Limited - - 100
Kotak Mahindra Investments Limited 600 250 372.5
Shriram Transport Finance Company Ltd. 322.1 819.6 97.2
Infrastructure Leasing & Finance Company Limited - - 687.9
Biscuits, being one of the fastest growing categories in FMCG, has a high penetration rate (+90%) in the Indian households. The biscuits industry in India is 3rd largest in the world after USA and China.
India biscuit market stood at USD3.9 bn in 2016, and is projected to grow at a CAGR of 11%, to reach USD7.25 bn by 2022.
Organised players, dominated by Britannia and Parle account for ~70% of the industry’s volumes.
Per capita consumption of biscuits in India is relatively low at 2 kgs versus 10 kgs in certain developed countries and offers significant opportunities for category growth and innovation.
A large population base, increase in disposable income, urbanization and change in lifestyle and food habits will further propel growth of the biscuit industry.
Dairy
Since 1998, India has been the largest producer and consumer of dairy products, currently contributing ~20% of the global production.
However, Indian milk industry continues to be largely unorganized, with organized sector contributing to only 20% by value.
Over the past few years, the processed milk products market has witnessed sustained growth due to increasing urbanization, rising disposable income and proliferation of retail outlets beyond Tier 1 cities.
Changing lifestyles and increasing awareness of nutrition and health benefits are expected to drive sales from value added products like cheese and yoghurt thus augmenting industry growth.
DART View - We believe that the outbreak of coronavirus will benefit the organised packaged food industry in the short to medium term due to consumers’ reluctance to order outside food and preference towards branded products. Further, work from home directives by companies would enhance in- home consumption of biscuits and snacks.
June 17, 2020 5
Financial Analysis
Profit & Loss Analysis
Revenue- Britannia witnessed moderate growth in the first half of the year. However, business was severely impacted by the COVID-19 pandemic in the last 15 days of Q4FY20. During FY20, net sales grew 4.9%, from Rs 110.5 bn in FY19 to Rs 116.0 bn in FY20. New categories constituted 2% of revenue in FY20. Despite the challenging business environment during FY20, Britannia was able to increase its market share in the weak markets and improve profitability through innovations, cost efficiency programs and distribution expansion.
Direct reach increased to 2.2mn outlets from 2.1mn in FY19. Rural distribution reach is expanding rapidly. Rural dealers count stood at 21K compared to 18K at end of March’19.
Raw material costs – RM costs increased 5.6% YoY to Rs 69.3bn in FY20. The company was able to restrict overall commodity inflation to ~3-4% in FY20. Gross margins declined 30bps to 40.3% in FY20 mainly due to upsurge in dairy prices.
Operating expenses – Employee cost (4.2% of net sales) stood at Rs4.9 bn in FY20 as compared to Rs4.4 bn in FY19, increasing 10.7% YoY. Selling and distribution expenses (9.3% of net sales) grew 2.0% YoY to Rs 10.8bn.
Margins- While raw material and employee costs increased 30bps and 20 bps respectively, selling & distribution and other expenses declined 30bps and 50bps respectively with cost efficiency initiatives. Consequently, EBITDA margin expanded 20bps to 15.9% in FY20. EBITDA grew 6.3% YoY to Rs 18.4bn during the year.
Tax expenses declined 26.4% YoY to Rs 4.5bn in FY20 due to transition to new corporate tax regime during the year. Effective tax rate stood at 24.4% in FY20.
Net Profit – Net Profit jumped 22.5% YoY to Rs 14.2bn in FY20. Net profit margin stood at 12.1% as compared to 10.5% in FY19. EPS stood at Rs 59.2 in FY20 from Rs 48.3 in FY19.
DART View – With ramp up in production, strong supply chain and distribution initiatives and focused marketing campaigns, company exhibited revenue growth of 20% YoY in April’20 and 28% YoY in May’20, despite Covid 19 led disruption in March 2020. We believe the company has potential to grow further, given improvement in market share and emphasis on products other than biscuits ie in snacks, croissants and dairy. We remain optimistic on Britannia, due to its focus on expanding distribution reach, increasing in-house manufacturing and launching of new value added products. Further, cost control initiatives coupled with downward trend in palm oil and milk prices should support margins in FY21E.
June 17, 2020 6
Balance Sheet and Cash Flow Analysis
Share capital: During FY20, Britannia allotted 1,50,002 equity shares of Rs 1/- each upon exercise of options under Employee Stock Option Scheme. Consequently, the paid up equity share capital increased by Rs 1,50,002 to Rs 240.5mn during the year.
Reserves: Total reserves stood at Rs 43.8bn in FY20 from Rs 42.3bn in FY19. Britannia transferred an amount of Rs Rs 1.48bn to the General Reserve and Rs 1.8bn to the Debenture Redemption Reserve during FY20.
Dividend: Over the years, Britannia has been consistent in its dividend distribution. The total dividend paid in FY20 stands at Rs 4,325mn with dividend payout of 30.5% and dividend yield of 0.5%. After the reporting date, in April’20, company declared Interim Dividend of 3,500% i.e., Rs 35 per Equity Share of Rs 1/- each for FY20 amounting to Rs 8.4bn.
Bonus debentures- On completion of 100 years, Britannia rewarded its shareholders with allotment of 240.3mn , 3-year secured, non-convertible, redeemable, fully paid-up Bonus Debentures of face value of Rs 30/- each, bearing interest at 8% p.a., as per the ratio stipulated in the Scheme of Arrangement i.e., 1 fully paid-up Debenture of face value of Rs 30/- each for every 1 fully paid-up equity share of face value of Re 1/- each.
Net block: Net block increased to Rs 18.6bn in FY20 from Rs 16.9 bn in FY19, a growth of 10.4%. This translated into a decline in fixed asset turnover from 6.5x in FY19 to 6.2x in FY20.
Capex: Capital expenditure shrunk by 38.9% YoY, from Rs 4.0bn in FY19 to Rs 2.4bn in FY20. Capex is expected to be Rs 2.0-3.0bn in FY21E.
Ranjangaon plant expansion is under progress. Britannia has successfully commissioned 3 Biscuit Lines and 1 Snack line at the Integrated Food Park, Ranjangaon, Maharashtra and operationalized its greenfield unit in Nepal.
Company had started to build a factory in Bihar which was put on hold. It plans to set up a factory in Tamil Nadu (being a large state for Britannia) and to build capacity in UP (as it is the largest biscuit market in the country but a weak state for Britannia).
Borrowing increased significantly from Rs 1.6bn in FY19 to Rs 15.1bn in FY20. Out of this, Rs 7.2bn is the bonus debenture; Rs 5bn is commercial paper borrowing primarily for managing working capital requirements- largely for commodity buying in the season; Rs 2.8bn is the total amount of borrowings in the Indian and foreign subsidiaries of Britannia with a weighted average borrowing rate of ~2%. This led to increase in debt-equity ratio from 0.04 in FY19 to 0.34 in FY20.
Cash and Bank balances declined by 6.4% to Rs1.0 bn in FY20 as against Rs 1.1 bn in FY19.
Working capital: Working Capital has been impacted due to coronavirus pandemic in March 2020. Debtors declined by 18.7%, from Rs3.9 bn in FY19 to Rs3.2 bn in FY20. Debtor days declined from 13 days to 10 days. Trade payables declined 2.1% YoY to Rs11.2 bn. Payable days remained stable at 42 days. Inventory fell by 5.2% YoY to Rs 7.4bn. Inventory days decreased from 26 in FY19 to 23 in FY20. Inventory turnover increased from 14.1x to 15.7x during the same period.
Return Ratios- ROE improved from 30.3% in FY19 to 32.4% in FY20 due to growth in net income on account of reduction in tax rates. ROCE remained stable at 29%. We believe that ROE is likely to average ~31-32% going ahead with improvement in profitability.
June 17, 2020 7
Cash flow from operations increased by 22.2% YoY to Rs 15.6bn in FY20. We believe that going forward Britannia will generate cumulative OCF of Rs 40bn over FY21-22E to suffice its capex and working capital requirement.
International Business
Britannia’s international business (~5% of turnover) is largely around Middle East, America, Africa, ASIAPAC and SAARC.
The products of the company are exported to over 79 countries globally.
Apart from competitive intensity, international business continues to be challenging due to geo-political conflicts, import duty barriers, exchange rate dynamics etc.
Britannia aims to achieve growth and gain market share in sluggish international environment by strengthening foothold among Indian diaspora across markets, developing new products, establishing local operations for scaling up- like the greenfield plant in Nepal.
New launches and relaunches
Company has re-launched NutriChoice Cream Crackers and NutriChoice Thin Arrowroot with improved product mix, visual product differentiation and differentiated packaging.
During the year, Britannia nurtured innovations that were launched at the end of FY2019- Britannia Treat Burst, Britannia Treat Stars and Britannia 50-50 Jeera.
Two variants were launched under Treat - Tiramisu and Red Velvet as an “in and out” during the year which were received well by the consumers.
Little Hearts Strawberry was launched which is under test marketing in Maharashtra.
Company is working on developing differentiated products like atta pizza, cheese garlic bread etc
It has recently launched Winkin Cow Lassi in the east as well as north and it is gaining traction.
Britannia expanded its brand Milk Bikis to North & West India with new campaigns, market visibility and intensive sales efforts.
Source: Company, DART
June 17, 2020 8
Other developments during the year
Britannia successfully commissioned 3 Biscuit Lines and 1 Snack line at the Integrated Food Park, Ranjangaon, Maharashtra and operationalized its greenfield unit in Nepal.
During the year, the company incorporated a wholly owned subsidiary in Dhaka, Bangladesh under the name of Britannia Bangladesh Private Limited.
The company sold its equity stake in Klassik Foods Private Limited, an associate company, during the year, and does not hold any stake in the entity.
During FY20, the company invested in areas of automation and technology upgradation for the launch of new products in existing categories and to enter into adjacent categories.
Britannia was recognised as “Food Company of the Year 2019” for the second consecutive time at the India Food Safety Excellence Awards 2019 organized by SYNNEX this year.
‘Good Day’ was rated the Most Trusted Brand in the Food Category and 3rd Most Trusted Brand across categories by Brand Equity.
Good Day strengthened its presence in the market with new campaign “Khushiyon Ki Zidd Karo” in November 2019 which starred Deepika Padukone.
In April 2019, Britannia partnered with ICC and brought back the most memorable ‘Britannia Khao, World Cup Jao’ Campaign.
During Covid-19 led lockdown, Britannia partnered with Dunzo to get its products delivered to consumers. It also launched Britannia Store Locator, 'WhatsApp' based tool which enables consumers to find stores with Britannia products near them.
During Covid crisis, 1.35 cr meal & meal equivalents and 90 lacs of bakery packs were distributed by the Wadia Group to the less fortunate, especially migrants, across 19 states and 110 cities.
June 17, 2020 9
Financial Metrics and Charts
Net sales trend EBITDA and Margin trend
Source: Company, DART Source: Company, DART
Net profit trend Return ratios
Source: Company, DART Source: Company, DART
Increase in Direct distribution (in lakhs) Number of Rural Preferred Dealers
Source: Company, DART Source: Company, DART
78.684.0
90.5
99.1
110.5 116.0
2
4
6
8
10
12
14
16
60
70
80
90
100
110
120
FY15 FY16 FY17 FY18 FY19 FY20
Net sales (Rs bn) Growth % - RHS
8.6
11.8 12.4
15.0
17.318.4
10
12
14
16
18
20
5
8
11
14
17
20
FY15 FY16 FY17 FY18 FY19 FY20
EBITDA(Rs bn) Margin % - RHS
6.97.9
8.4
10.0
11.6
14.0
01020304050607080
5
7
9
11
13
15
FY15 FY16 FY17 FY18 FY19 FY20
Net Profit (Rs bn) Growth (%) - RHS
20%
30%
40%
50%
60%
FY15 FY16 FY17 FY18 FY19 FY20
ROE (%) ROCE (%)
7.3
10.0
12.6
15.5
18.4
21.022.2
0
5
10
15
20
25
Mar-14 Mar-15 Mar-16 Mar-17 Mar-18 Mar-19 Feb-20
7000 800010000
14000
18000
21000
0
5,000
10,000
15,000
20,000
25,000
Mar-15 Mar-16 Mar-17 Mar-18 Mar-19 Feb-20
June 17, 2020 10
Trend in revenue growth (YoY %) Trend in domestic volume growth (YoY %)
Source: DART, Company Source: DART, Company
Trend in Gross margins (%) Trend in EBITDA margins (%)
Source: DART, Company Source: DART, Company
5.2 5.7 6
.6
12
.5
13
.1
12
.4
12
.7
10
.7
10
.3
6.2 6.2
4.9
2.5
02468
10121416
Q4
FY1
7
Q1
FY1
8
Q2
FY1
8
Q3
FY1
8
Q4
FY1
8
Q1
FY1
9
Q2
FY1
9
Q3
FY1
9
Q4
FY1
9
Q1
FY2
0
Q2
FY2
0
Q3
FY2
0
Q4
FY2
0
2.0
2.0
5.0
12
.0
12
.0
12
.0
12
.0
7.0
7.0
3.0
3.0
3.0
0.8
02468
10121416
Q4
FY1
7
Q1
FY1
8
Q2
FY1
8
Q3
FY1
8
Q4
FY1
8
Q1
FY1
9
Q2
FY1
9
Q3
FY1
9
Q4
FY1
9
Q1
FY2
0
Q2
FY2
0
Q3
FY2
0
Q4
FY2
0
38
.0
38
.7
37
.8 38
.7
38
.5
40
.0
40
.0
41
.3
41
.2
40
.4
40
.2 40
.9
39
.7
37
38
39
40
41
42
Q4
FY1
7
Q1
FY1
8
Q2
FY1
8
Q3
FY1
8
Q4
FY1
8
Q1
FY1
9
Q2
FY1
9
Q3
FY1
9
Q4
FY1
9
Q1
FY2
0
Q2
FY2
0
Q3
FY2
0
Q4
FY2
0
13
.7 14
.5
14
.8 15
.5
15
.6
15
.3
15
.8
15
.9
15
.6
14
.6
16
.1
16
.8
15
.8
13141415151616171718
Q4
FY1
7
Q1
FY1
8
Q2
FY1
8
Q3
FY1
8
Q4
FY1
8
Q1
FY1
9
Q2
FY1
9
Q3
FY1
9
Q4
FY1
9
Q1
FY2
0
Q2
FY2
0
Q3
FY2
0
Q4
FY2
0
June 17, 2020 11
Profit and Loss Account
(Rs Mn) FY19A FY20A FY21E FY22E
Revenue 110,547 115,996 130,387 145,305
Total Expense 93,213 97,564 109,210 121,702
COGS 65,615 69,275 78,010 87,249
Employees Cost 4,418 4,889 5,512 5,939
Other expenses 23,180 23,400 25,689 28,514
EBIDTA 17,334 18,432 21,177 23,603
Depreciation 1,619 1,848 2,043 2,277
EBIT 15,715 16,584 19,134 21,326
Interest 91 769 1,523 1,593
Other Income 2,065 2,794 3,873 3,890
Exc. / E.O. items 0 (170) 0 0
EBT 17,689 18,439 21,484 23,624
Tax 6,125 4,507 4,969 5,430
RPAT 11,591 14,026 16,543 18,221
Minority Interest (27) (95) (27) (27)
Profit/Loss share of associates 0 0 0 0
APAT 11,591 14,196 16,543 18,221
Balance Sheet
(Rs Mn) FY19A FY20A FY21E FY22E
Sources of Funds
Equity Capital 240 241 241 241
Minority Interest 327 357 334 312
Reserves & Surplus 42,292 43,788 51,318 60,407
Net Worth 42,533 44,028 51,559 60,647
Total Debt 1,560 15,139 15,139 15,139
Net Deferred Tax Liability (99) (756) (756) (756)
Total Capital Employed 44,321 58,768 66,276 75,342
Applications of Funds
Net Block 16,883 18,634 19,641 20,414
CWIP 1,012 396 396 396
Investments 14,763 28,916 30,916 32,916
Current Assets, Loans & Advances 29,622 29,399 35,609 42,807
Inventories 7,814 7,410 7,099 7,850
Receivables 3,942 3,204 4,115 4,539
Cash and Bank Balances 1,098 1,028 4,100 9,965
Loans and Advances 14,910 13,399 15,936 16,095
Other Current Assets 1,858 4,359 4,359 4,359
Less: Current Liabilities & Provisions 17,960 18,577 20,285 21,191
Payables 11,405 11,162 12,593 13,098
Other Current Liabilities 6,555 7,415 7,692 8,093
sub total
Net Current Assets 11,663 10,822 15,323 21,616
Total Assets 44,321 58,768 66,276 75,342
E – Estimates
June 17, 2020 12
Important Ratios
Particulars FY19A FY20A FY21E FY22E
(A) Margins (%)
Gross Profit Margin 40.6 40.3 40.2 40.0
EBIDTA Margin 15.7 15.9 16.2 16.2
EBIT Margin 14.2 14.3 14.7 14.7
Tax rate 34.6 24.4 23.1 23.0
Net Profit Margin 10.5 12.1 12.7 12.5
(B) As Percentage of Net Sales (%)
COGS 59.4 59.7 59.8 60.0
Employee 4.0 4.2 4.2 4.1
Other 21.0 20.2 19.7 19.6
(C) Measure of Financial Status
Gross Debt / Equity 0.0 0.3 0.3 0.2
Interest Coverage 172.9 21.6 12.6 13.4
Inventory days 26 23 20 20
Debtors days 13 10 12 11
Average Cost of Debt 5.1 9.2 10.1 10.5
Payable days 38 35 35 33
Working Capital days 39 34 43 54
FA T/O 6.5 6.2 6.6 7.1
(D) Measures of Investment
AEPS (Rs) 48.3 59.2 68.9 75.9
CEPS (Rs) 55.0 66.9 77.4 85.4
DPS (Rs) 14.8 18.0 37.6 38.1
Dividend Payout (%) 30.6 30.5 54.5 50.1
BVPS (Rs) 177.2 183.5 214.8 252.7
RoANW (%) 30.3 32.4 34.6 32.5
RoACE (%) 29.0 28.9 28.9 27.9
RoAIC (%) 40.6 32.9 31.9 33.4
(E) Valuation Ratios
CMP (Rs) 3345 3345 3345 3345
P/E 69.3 56.6 48.5 44.1
Mcap (Rs Mn) 802,884 802,884 802,884 802,884
MCap/ Sales 7.3 6.9 6.2 5.5
EV 803,346 816,995 813,923 808,058
EV/Sales 7.3 7.0 6.2 5.6
EV/EBITDA 46.3 44.3 38.4 34.2
P/BV 18.9 18.2 15.6 13.2
Dividend Yield (%) 0.4 0.5 1.1 1.1
(F) Growth Rate (%)
Revenue 11.5 4.9 12.4 11.4
EBITDA 15.4 6.3 14.9 11.5
EBIT 15.6 5.5 15.4 11.5
PBT 16.5 4.2 16.5 10.0
APAT 15.4 22.5 16.5 10.1
EPS 15.4 22.5 16.5 10.1
Cash Flow
(Rs Mn) FY19A FY20A FY21E FY22E
CFO 12,742 15,566 18,657 21,640
CFI (9,724) (15,707) (5,050) (5,050)
CFF (3,784) 71 (10,535) (10,725)
FCFF 8,748 13,125 15,607 18,590
Opening Cash 1,864 1,098 1,028 4,100
Closing Cash 1,098 1,028 4,100 9,965
E – Estimates
DART RATING MATRIX
Total Return Expectation (12 Months)
Buy > 20%
Accumulate 10 to 20%
Reduce 0 to 10%
Sell < 0%
Rating and Target Price History
Month Rating TP (Rs) Price (Rs)
May-18 Accumulate 2,896 2,738
Jul-18 Accumulate 2,896 3,179
Aug-18 Accumulate 3,304 3,151
Nov-18 Accumulate 3,175 2,906
Feb-19 Accumulate 3,469 3,108
May-19 Reduce 2,767 2,696
Jun-19 Reduce 2,767 2,901
*Price as on recommendation date
DART Team Purvag Shah Managing Director [email protected] +9122 4096 9747
Amit Khurana, CFA Head of Equities [email protected] +9122 4096 9745
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