1

SYNOPSIS

Britannia Industries Limited engages in the production and sale of bakery and dairy products in India and internationally.

During the quarter ended, the robust growth of Net Profit is increased by 22.59% to Rs. 530.20 million.

Britannia Industries Ltd has recommended a dividend of 425% (Rs. 8.5/- per share of face value of Rs. 8.5% per share of face value of Rs. 2).

CRISIL has assigned credit rating to Britannia Industries’ as AAA rating.

Britannia Industries Ltd has approved the grant of 1,00,000 stock options. Each Option granted will entitle the Employee upon exercise of the Options, to receive one share of the Company of the face value of Rs. 2/-.

Net Sales and PAT of the company are

expected to grow at a CAGR of 13%

and 22% over 2011to 2014E

respectively.

Years Net sales (Rs.mn)

EBITDA (Rs.mn)

Net Profit (Rs.mn) EPS P/E

FY 12 49741.90 3377.60 1867.40 15.63 33.45

FY 13E 55959.64 3904.99 2255.45 18.88 27.69

FY 14E 61555.60 4406.33 2613.53 21.88 23.90

Stock Data:

Sector: FMCG

Face Value Rs. 2.00

52 wk. High/Low (Rs.) 599.90/422.30

Volume (2 wk. Avg.) 5486.00

BSE Code 500825

Market Cap (Rs.In mn) 62460.41

Share Holding Pattern

1 Year Comparative Graph

BRITANNIA INDUSTRIES BSE SENSEX

C.M.P: Rs. 522.90 Target Price: Rs. 596.00 Date: June18th, 2012 BUY

Britannia Industries Ltd Result Update: Q4 FY 12

2

Peer Group Comparison

Name of the company CMP(Rs.) Market Cap. (Rs.Mn.) EPS(Rs.) P/E(x) P/Bv(x) Dividend (%)

Britannia Industries 522.90 62460.41 15.63 33.45 12.01 325.00

Nestle India 4515.00 435606.20 113.71 39.73 34.19 485.00

Venky’s (India) Ltd 417.55 3925.70 43.68 9.57 1.25 50.00

KSE Ltd 238.00 761.60 32.65 7.29 1.74 100.00

Investment Highlights

Q4 FY12 Results Update

Britannia Industries Ltd has posted a rise of 22.59% in net profit of Rs. 530.20 million

for the quarter ended on March 31, 2012 as compared to Rs. 432.50 million for the

quarter ended on March 31, 2011. Net sales surged by 17.16% to Rs.13218.90 million

from Rs.11282.80 million as compared to same quarter last year. Total Income has

increased by 16.80% from Rs. 11405.50 million for the quarter ended on March 31,

2011 to Rs. 13321.20 million for the quarter ended on March 31, 2012. The EPS of the

company is stood at Rs.4.44 for the quarter ended March 31, 2012.

Quarterly Results - Standalone (Rs in mn)

As At Mar-12 Mar -11 %change

Net sales 13218.90 11282.80 17.16

PAT 530.20 432.50 22.59

Basic EPS 4.44 3.62 22.59

3

Break up of Expenditure

Recommended Dividend

Britannia Industries Ltd has recommended a dividend of 425% (Rs. 8.5/- per share

of face value of Rs. 8.5% per share of face value of Rs. 2).

Grant of Stock Options under the Employee Stock Option Scheme

Britannia Industries Ltd has approved the grant of 1,00,000 stock options. Each

Option granted will entitle the Employee upon exercise of the Options, to receive

one share of the Company of the face value of Rs. 2/-.

These Options have been granted subject to the terms and conditions governing

the ESOS including the following:

� Vesting period: A minimum period of one year from the date of grant.

Accordingly the options will vest on May 28, 2013.

4

� Exercise price: Rs. 528.75 per share. (Market price as at the close of May 25,

2012).

� Exercise period: To commence from the date of vesting and to expire not later

than 3 years from the date of vesting.

Company Profile

Britannia Industries Limited is an Indian company based in Kolkata that is famous for

its Britannia and Tiger brands of biscuit, which are popular throughout the country.

Britannia has an estimated 38% market share. The Company's principal activity is the

manufacture and sale of biscuits, bread, rusk, cakes and dairy products.

In 1892, Britannia started in a nondescript house in Kolkata) with an initial

investment of Rs 295. By 1910, with the advent of electricity, mechanized its

operations, and in 1921, it became the first company east of the Suez Canal to use

imported gas ovens.

In 1975, the Britannia Biscuit Company took over the distribution of biscuits from

Parry's who till now distributed Britannia biscuits in India. In the subsequent public

issue of 1978, Indian shareholding crossed 60%, firmly establishing the Indian’s of the

firm. The following year, Britannia Biscuit Company was re-christened Britannia

Industries Limited (BIL). Four years later in 1983, it crossed the Rs. 100 crores

revenue mark.

In 1992, it celebrated its Platinum Jubilee. In 1997, the company unveiled its new

corporate identity - "Eat Healthy, Think Better" - and made its first foray into the dairy

products market. In 1999, the "Britannia Khao, World Cup Jao" promotion further

fortified the affinity consumers had with 'Brand Britannia'.

Britannia strode into the 21st Century as one of India's biggest brands and the pre-

eminent food brand of the country. In recognition of its vision and accelerating graph,

Forbes Global rated Britannia 'One amongst the Top 200 Small Companies of the

World', and The Economic Times pegged Britannia India's 2nd Most Trusted Brand.

5

The brand Britannia is the trust of almost one-third of India's one billion populations

and a strong management at the helm on its path of innovation and quality.

Britannia is the leading biscuit manufacturer in the Rs 124 billion Indian bakery

market. Its primary business is bakery consisting of biscuits, bread and cakes. In

2006, Britannia picked up a 50% stake in Daily Bread (retailer of high-end bakery

products.) from Cafe Coffee Day. The company operates in the dairy segment through

its subsidiary Britannia Dairy. The dairy segment comprising of milk, butter, cheese,

ghee and curds accounts for 4.7% of Britannia's group turnover.

Products Overview

The company's offerings are spread across the spectrum with products ranging from

the healthy and economical Tiger biscuits to the more lifestyle-oriented Milkman

Cheese.

• Britannia NutriChoice Oat Cookies

• Britannia NutriChoice Ragi Cookies

• Britannia Veg Cakes

• Nutrichoice Health Starter Kit

• Britannia NutriChoice 5 Grain

• Tiger Banana

• NutriChoice Sugar Out: Litetime, Chocolate cream, and Orange cream

• NutriChoice Digestive Biscuit

• Treat Fruit Rollz: Juicy Apple, Strawberry Surprise, Tangy Orange and

Delicious Dates

• New Britannia Milk Bikis

Global Presence

In March 2007, Britannia Industries Limited formed a Joint Venture with the Khimji

Ramdas Group, one of the largest and the most respected business conglomerates in

the Middle East. Britannia and its Associates have acquired a significant stake in

Dubai based Strategic Food International Co. LLC and Oman based Al Sallan Food

Industries Co SAOG. The two companies are key regional players in the biscuits,

wafers and cookies segment in the GCC markets and export their products across the

6

world.

Strategic Food International Co. LLC (SFIC) is one of the largest biscuit and wafer

manufacturing companies in the Middle East. An ISO and HACCP certified company.

SFIC is also a proud winner of the Dubai Quality Appreciation Certificate. It offers a

wide spectrum of products under the brand Nutro, which is a leading biscuit brand in

the Middle East.

Al Sallan Food Industries Co is one of the foremost companies for the production of

cookies, rolls and chocolates. The products are well known under the brand name

of Baker's Pride.

Brands Category

7

• Dairy products

Britannia holds an equity stake in Dynamix Dairy and outsources the bulk of

its dairy products from its associate. The products in this segment include

Butter, Milk, Dahi, Diary Whitener, Ghee, Actimind, Tigerzor Choco Milk,

Tigerzor Badam Milk, Cheese and Gourmet.

• Biscuits

The brand names of biscuits include Timepass, Bourbon, Cookies,

VitaMarieGold, Tiger, Nutrichoice Junior, Good day, 50-50, Treat, Pure Magic,

Milk Bikis, Good Morning, Bourbon, Thin Arrowroot, Nice, Little Hearts, Marie

Gold and many more.

8

Financials Results

12 Months Ended Profit & Loss Account (Standalone)

Value(Rs.in.mn) FY11 FY12 FY13E FY14E

Description 12m 12m 12m 12m

Net Sales 42199.70 49741.90 55959.64 61555.60

Other Income 525.60 585.30 614.57 651.44

Total Income 42725.30 50327.20 56574.20 62207.04

Expenditure -39920.60 -46949.60 -52669.21 -57800.71

Operating Profit 2804.70 3377.60 3904.99 4406.33

Interest -377.40 -380.70 -392.12 -399.96

Gross profit 2427.30 2996.90 3512.87 4006.37

Depreciation -445.90 -473.20 -501.59 -521.66

Profit Before Tax 1981.40 2523.70 3011.28 3484.71

Tax -528.50 -656.30 -755.83 -871.18

Profit After Tax 1452.90 1867.40 2255.45 2613.53

Equity capital 238.90 238.90 238.90 238.90

Reserves 4274.10 4961.50 7216.95 9830.48

Face value 2.00 2.00 2.00 2.00

EPS 12.16 15.63 18.88 21.88

9

Quarterly Ended Profit & Loss Account (Standalone)

Value(Rs.in.mn) 30-Sep-11 31-Dec-11 31-Mar-12 30-Jun-12E

Description 3m 3m 3m 3m

Net sales 12956.80 12491.00 13218.90 12914.87

Other income 95.00 131.30 102.30 158.57

Total Income 13051.80 12622.30 13321.20 13073.43

Expenditure -12320.00 -11658.40 -12415.30 -12165.80

Operating profit 731.80 963.90 905.90 907.63

Interest -96.80 -95.30 -95.30 -96.82

Gross profit 635.00 868.60 810.60 810.80

Depreciation -115.50 -121.60 -125.20 -135.22

Profit Before Tax 519.50 747.00 685.40 675.59

Tax -141.00 -206.30 -155.20 -172.27

Profit After Tax 378.50 540.70 530.20 503.31

Equity capital 238.90 238.90 238.90 238.90

Face value 2.00 2.00 2.00 2.00

EPS 3.17 4.53 4.44 4.21

10

Key Ratios

Particulars FY11 FY12 FY13E FY14E

No. of Shares(in mn) 119.45 119.45 119.45 119.45

EBITDA Margin (%) 6.65% 6.79% 6.98% 7.16%

PBT Margin (%) 4.70% 5.07% 5.38% 5.66%

PAT Margin (%) 3.44% 3.75% 4.03% 4.25%

P/E Ratio (x) 42.99 33.45 27.69 23.90

ROE (%) 32.19% 35.91% 30.25% 25.96%

ROCE (%) 36.82% 39.57% 36.08% 32.71%

Debt Equity Ratio 0.96 0.87 0.64 0.50

EV/EBITDA (x) 22.27 18.49 16.00 14.18

Book Value (Rs.) 37.78 43.54 62.42 84.30

P/BV 13.84 12.01 8.38 6.20

Charts:

Net sales & PAT

11

P/E Ratio

Debt Equity Ratio

12

EV/EBITDA Ratio

P/BV Ratio

13

Outlook and Conclusion

At the current market price of Rs.522.90, the stock is trading at 27.69 x FY13E

and 23.90 x FY14E respectively.

Earning per share (EPS) of the company for the earnings for FY13E and FY14E

is seen at Rs.18.88 and Rs.21.88 respectively.

Net Sales and PAT of the company are expected to grow at a CAGR of 13% and

22% over 2011 to 2014E respectively.

On the basis of EV/EBITDA, the stock trades at 16.00 x for FY13E and 14.18 x

for FY14E.

Price to Book Value of the stock is expected to be at 8.38 x and 6.20 x

respectively for FY13E and FY14E.

We expect that the company will keep its growth story in the coming quarters

also. We recommend ‘BUY’ in this particular scrip with a target price of

Rs.596.00 for Medium to Long term investment.

Industry Overview

The Indian food and drinks market has witnessed strong growth over the past few

years. Liberalization of the economy and growing income of middle class population

have had a positive impact on consumer spending and consumption in both rural and

urban areas. Indian consumers now spend a significant proportion of their income on

food and other essential commodities. Numerous other factors like demographic and

macro-economic conditions have also given boost to expenditure on food and

beverages in the country.

The total food production in India is expected to double in the next ten years and there

is ample opportunity for huge investments in food and food processing technologies,

skills and equipments.

14

The food processing industry in India stands at US$ 135 billion and is projected to

grow with a compound annual growth rate (CAGR) of 10 per cent to reach US$ 200

billion by 2015.

The food industry is divided into various segments namely, milk and allied products

(dairy), meat and poultry, seafood, bakery and confectionery, fruit and vegetables,

grain, pulses and oilseeds (staple) products, alcoholic and non-alcoholic products

(beverages), and packaged food.

The food processing industry in India is witnessing quick growth. In addition to the

demand side, there are changes happening on the supply side as well with the growth

in organized retail, increasing foreign direct investment (FDI) in food processing and

introduction of new products.

The growth has happened because the Government of India has given a priority status

to all agro-processing businesses. Government incentives in the field of mega food

parks, cold chain and exports benefits are also playing an important role in

encouraging food processing.

Key Players

The major players operating in the Indian food and beverages industry include Dabur

India Limited, Godrej Industries Limited, Hindustan Lever Limited, Britannia

Industries Limited, ITC Limited, Nestle` SA, PepsiCo, Inc, Cadbury Schweppes PLC,

Future Group, RPG Enterprise and Godrej Agrovet Limited.

Food Processing Industry

Food processing industry is one of the major sectors in India in terms of production,

growth, consumption, and export. The turnover of the total food market is

approximately US$ 69.4 billion out of which value-added food products comprise US$

22.2 billion. India's food processing sector covers fruit and vegetables; spices; meat

and poultry; milk and milk products, alcoholic beverages, fisheries, plantation, grain

processing and other consumer product groups like confectionery, chocolates and

cocoa products, soya-based products, mineral water, high protein foods etc.

15

India is the world's largest producer of milk, second largest producer of fruits and

vegetables and the third largest fish producer and it ranks second in inland fish

production. With a huge agriculture sector, abundant livestock, and cost

competitiveness; India is fast emerging as a sourcing hub of processed food. India

produces 200 million tonnes (MT) of food grains each year.

India's comparative advantage lies in its favourable climate, geographic location - it is

geographically close to key export destinations (Middle East, South East Asia), large

agriculture sector and livestock base, long coastline, and inland water resources.

Government of India anticipates US$ 21.9 billion of investments in food processing

infrastructure by 2015. Investments, including foreign direct investment (FDI), will

rise with strengthening demand and supply fundamentals. The FDI inflow into

agriculture and food processing during April 2000-April 2011 was US$ 4 billion.

Beverages

According to a report titled "Indian Non-Alcoholic Drinks Forecast to 2012" by

research firm RNCOS, the Indian non-alcoholic drinks market was estimated at

around Rs 216 billion (US$ 4 billion approximately) in 2008 and is forecasted to grow

at a CAGR of around 15 per cent during 2009-2012. The report covers numerous

factors driving the growth of non-alcoholic drinks market in India.

According to findings of the report the highest growth will be seen in the fruit/

vegetable juice market, which is forecasted to grow at a CAGR of around 30 per cent in

value terms during 2009-2012, followed by the energy drinks segment at a CAGR of

around 29 per cent during the same period.

Investments

• Quick service restaurant company Dunkin' Brands will localize its menu in

India to have savoury products, according to John Costello, Chief Global

Marketing and Innovation Officer, Dunkin Brands. Costello said that India's

economy and a growing middle class presented a significant opportunity for the

16

US$ 8.4 billion company to partner Jubilant Food works and the Indian firm's

success with Dominos Pizza added to it. It plans to have 500 Dunkin' Donuts

outlets in India over the next 15 years

• The world's largest fast-food chain - McDonalds, is shedding its familiar red and

yellow colour for more muted tones as it goes for its biggest and costliest

revamp in India, in line with its global strategy of attracting more adults. The

red and yellow company logo will be replaced with white across 240 restaurants

• Packaged foods maker Nestle India announced the launch of one of its global

programmes, Nestle India, to assist coffee farmers and help it optimize its coffee

supply chain. It launched the first Nescafe coffee demo farm and training centre

in Karnataka under the initiative

• Australia's fastest-growing and most-awarded coffee company, Di Bella Coffee,

plans to enter the Indian market with at least six cafés in Mumbai in January

2012. "Our target is the youth. We would offer free internet usage per cup of

coffee," as per Sachin Sabharwal, Managing Director, Di Bella Coffee India Pvt

Ltd.

Government Initiatives

According to the recently announced Union Budget 2012-13 following initiatives will

be taken by the Government:

National Mission on Food Processing

• A new centrally sponsored scheme titled "National Mission on Food Processing"

to be started in 2012-13 in co-operation with State Governments

• Steps taken to create additional food grain storage capacity in the country

• Subsidies fully provided for effective administration of the proposed Food

Security Legislation

• To promote private sector activity and invite foreign investments in the sector

the Government allows 100 per cent FDI in the food processing & cold chain

infrastructure

17

Road ahead

India is one of the fastest growing branded restaurants markets in the world, where

the organized eating-out market is estimated at US$ 2 billion and growing at a CAGR

of 25 per cent.

With massive scope for value addition, growing trend in the consumption pattern of

processed food products in India and many fiscal incentives being planned by the

Government, this sector is capable of maintaining the growth momentum in the

future.

________________ ____ _________________________ Disclaimer:

This document prepared by our research analysts does not constitute an offer or solicitation

for the purchase or sale of any financial instrument or as an official confirmation of any

transaction. The information contained herein is from publicly available data or other

sources believed to be reliable but do not represent that it is accurate or complete and it

should not be relied on as such. Firstcall India Equity Advisors Pvt. Ltd. or any of it’s

affiliates shall not be in any way responsible for any loss or damage that may arise to any

person from any inadvertent error in the information contained in this report. This document

is provide for assistance only and is not intended to be and must not alone be taken as the

basis for an investment decision.

18

Firstcall India Equity Research: Email – info@firstcallindia.com

C.V.S.L.Kameswari Pharma

U. Janaki Rao Capital Goods

B.Anil Kumar Diversified

Ashish.Kushwaha Diversified

A.Nagaraju Diversified

Firstcall India also provides

Firstcall India Equity Advisors Pvt.Ltd focuses on, IPO’s, QIP’s, F.P.O’s,Takeover

Offers, Offer for Sale and Buy Back Offerings.

Corporate Finance Offerings include Foreign Currency Loan Syndications,

Placement of Equity / Debt with multilateral organizations, Short Term Funds

Management Debt & Equity, Working Capital Limits, Equity & Debt

Syndications and Structured Deals.

Corporate Advisory Offerings include Mergers & Acquisitions(domestic and

cross-border), divestitures, spin-offs, valuation of business, corporate

restructuring-Capital and Debt, Turnkey Corporate Revival – Planning &

Execution, Project Financing, Venture capital, Private Equity and Financial

Joint Ventures

Firstcall India also provides Financial Advisory services with respect to raising

of capital through FCCBs, GDRs, ADRs and listing of the same on International

Stock Exchanges namely AIMs, Luxembourg, Singapore Stock Exchanges and

other international stock exchanges.

For Further Details Contact:

3rd Floor,Sankalp,The Bureau,Dr.R.C.Marg,Chembur,Mumbai 400 071

Tel. : 022-2527 2510/2527 6077/25276089 Telefax : 022-25276089

E-mail: info@firstcallindiaequity.com

www.firstcallindiaequity.com