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This article is more than 2 year old.

Over 3600% returns! This FMCG stock turned Rs 10,000 into Rs 3.7 lakh in 20 years

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The stock has rallied over 3,600 percent in the last 20 years — from around Rs 83 in 1999 to Rs 3,100 currently.

Over 3600% returns! This FMCG stock turned Rs 10,000 into Rs 3.7 lakh in 20 years
FMCG major Britannia has been a godsend for long-term investors. The stock has rallied more than 3,600 percent in the last 20 years — from around Rs 83 in 1999 to Rs 3,100 currently. To put into perspective, an investment of Rs 10,000 in 1999 would have turned into Rs 3.7 lakh today.
The stock has risen 9 percent in the last one year and has been flat (down 0.2 percent) in 2019 despite the liquidity issues and slowdown in demand.
Other peers like Emami, ITC, Godrej Consumer have fallen between 11-28 percent in 2019. In comparison, the Nifty has gained 4.5 percent this year.
The stock hit its 52-week high of Rs 3,443.90 on September 23, 2019, and 52-week low of Rs 2,302.00 on August 21, 2019. The current market capitalisation of the company stands at Rs 75,314 crore.
In Q1, Britannia reported a marginal fall in its net profit amid sluggish demand. The company's Q1FY20 net profit was down 3.5 percent at Rs 249 crore against Rs 258.1 crore in the same quarter last fiscal. Revenue rose 6.2 percent YoY at Rs 2,700.4 crore versus Rs 2,543.8 crore.
For Q2, most analysts are expecting a better growth owing to corporate tax cuts.
Post corporate tax cuts and consequent likely passing on of benefits, Motilal Oswal elevated Britannia Industries to its list of preferred picks.
In Q2, the FMCG major is expected to see a sales growth of 8 percent YoY to Rs 3,090 crore, with base business volumes growing 4 percent on a high base of 11 percent volume growth, it said.
The gross margin is expected to remain flat YoY at 40 percent, while the operating margin is seen contracting by 20 basis points YoY to 15.6 percent, it noted. One basis point is a hundredth of a percentage point.
Credit Suisse downgraded Britannia to 'neutral' and also cut its target price. It prefers Nestle, Dabur, and Colgate in the sector.
According to Phillip Capital, volume growth of the company will be in the slow lane due to liquidity crunch, rural slowdown and increased competition, however, new categories will continue to do well.
Gross margin will decline moderately YoY due to higher costs, particularly milk, but profit is likely to grow post-tax cuts, it noted.
 
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