In the last 10 years, the FMCG stock has delivered 1,753 percent returns to LTP.
FMCG sector is also known as defensive space for a reason as it is believed to give consistent returns over years with the idea that consumption would never stop. And one such stock that lives up to this is Britannia Industries.
Known for its best-selling biscuits and cakes, the stock has received the most trust from its investors. In the last 10 years, the stock has delivered 1,753 percent returns to LTP.
In the last one year, the stock rose hardly 2 percent owing to demand slowdown, declining rural market share, liquidity crunch, and so on. Despite the pressure on the industry, the company reported robust July-September earnings.
The sales during the quarter rose only 7 percent year-on-year (YoY) but net profit jumped 74 percent YoY to Rs 492.58 crore from Rs 283.57 crore in the corresponding quarter last year.
The volume growth continued to remain stable at 3 percent MoM but when compared to last year, it declined by 9 percent to current volume growth.
Britannia managed to maintain the volume growth by pro-actively hedging themselves by pre-booking input commodities. This, coupled with their accelerated drive on cost efficiencies and leveraged fixed costs, resulted in the highest-ever quarterly EBITDA posted by the company.
JM Financial, in its report, said the management saw non-biscuit contribution to the overall revenue to inch up from about 25 percent currently to 30 percent over the next two years.
"We like Britannia on account of distribution expansion, continued innovation, gradual market share gain, growth acceleration in weak markets and strong uphold on a segment like cookies," the report added.
The brokerage recommended ‘buy’ on the stock with sequential targets at Rs 3,340 or Rs 3,485.