result update britannia industries -...

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Edelweiss Securities Limited

Britannia Industries’ (Britannia) 5.2%, 6.1% and 6.0% YoY revenue, EBITDA and PAT growth, respectively, came in line with our estimates. Amidst sluggish demand environment, volume growth was soft at 2% YoY, akin to demonetisation quarter; overall biscuits jumped 8% YoY, improving from 6% YoY in Q3FY17. Consolidated growth was impacted by subdued international (tough geopolitical situation, currency fluctuation), dairy (higher focus on value-added products) and bread businesses. Amidst input price inflation (up 10% YoY), biscuit category is clocking soft growth, further accentuated by higher competition from Parle. Britannia, however, gained market share and we expect it to benefit from pick up in demand and entry in new categories. Maintain ‘BUY’ on dips.

Sales growth soft; ad spend rationalisation, cost savings aid margin

Key highlights: (i) consolidated and standalone sales grew 5.2% and 6.6% YoY,

respectively. Consolidated sales were lower as international business was impacted by

tough geopolitical situation in Middle East & Africa and soft growth in dairy business;

and (ii) consolidated and standalone EBITDA margin rose 12bps and 9bps YoY,

respectively, despite gross margin pressure (inflation in excess of 10%), aided by ad

spends rationalisation and cost efficiency programme.

Q4FY17 conference call: Key takeaways

Biscuit category grew 2% YoY in volume terms in Q4FY17-while value segment

declined, premium & health segments clocking good growth. Focusing on direct

distribution – direct reach has doubled in 3 years and is double the market leader’s.

Britannia will not increase prices before GST implementation– requires 4% price hike to

counter input price rise. Q4FY17 ad spends dipped 20-25% YoY; targeting 40% more

cost savings in FY18 (cost savings of INR1.55bn in FY17).

Outlook and valuations: Positive; maintain ‘BUY’

Strong product pipeline and entry in new categories will help Britannia outperform

industry. Increased competition and softer category growth remain near-term

concerns. The stock is trading at 34.5x FY19E EPS. We maintain ‘BUY/SO’ with target

price of INR3,775.

RESULT UPDATE

BRITANNIA INDUSTRIES Volumes lose crunch; GST and innovations key monitorables

COMPANYNAME

EDELWEISS 4D RATINGS

Absolute Rating BUY

Rating Relative to Sector Outperform

Risk Rating Relative to Sector Low

Sector Relative to Market Underweight

MARKET DATA (R: BRIT.BO, B: BRIT IN)

CMP : INR 3,425

Target Price : INR 3,775

52-week range (INR) : 3,800 / 2,519

Share in issue (mn) : 120.0

M cap (INR bn/USD mn) : 411 / 6,359

Avg. Daily Vol.BSE/NSE(‘000) : 184.9

SHARE HOLDING PATTERN (%)

Current Q2FY17 Q1FY17

Promoters *

50.7 50.7 50.7

MF's, FI's & BK’s 11.7 11.0 9.5

FII's 16.0 17.4 18.7

Others 21.6 20.9 21.1

* Promoters pledged shares (% of share in issue)

: NIL

PRICE PERFORMANCE (%)

Stock Nifty

EW Consumer goods Index

1 month (5.5) 3.4 7.0

3 months 6.1 8.4 14.4

12 months 24.7 17.7 23.7

Abneesh Roy +91 22 6620 3141

[email protected]

Tanmay Sharma, CFA +91 22 4040 7586

[email protected]

Alok Shah +91 22 6620 3040

[email protected]

India Equity Research| Consumer Goods

May 30, 2017

Financials (INR mn)

Year to March Q4FY17 Q4FY16 % Chg Q3FY17 % Chg FY17 FY18E FY19E

Net revenues 22,444 21,337 5.2 22,820 (1.6) 90,541 102,469 117,178

EBITDA 3,081 2,903 6.1 3,126 (1.4) 12,782 14,713 17,295

Adjusted Profit 2,109 1,990 6.0 2,204 (4.3) 8,846 9,884 11,918

Adjusted Diluted EPS 17.6 16.6 6.0 18.4 (4.3) 73.7 82.4 99.3

Diluted P/E (x) 46.5 41.6 34.5

EV/EBITDA (x) 31.9 27.4 23.0

ROAE (%) 44.5 40.3 39.8

Consumer Goods

2 Edelweiss Securities Limited

Q4FY17 conference call: Key highlights

Demand, industry and market share

Base business grew 8% YoY in Q4FY17 with 2% YoY volume growth.

Biscuit category grew 2% YoY in volume terms in Q4FY17.

Confident of good growth in next 3-6 months if there are no negative surprises in GST.

Market environment remains challenging and demand is sluggish post demonetisation.

Market is growing in low single digits.

The company grew ahead of the market and gained market share.

Competition has intensified in certain segments amidst lower growth in the market.

Inflationary environment in biscuit industry leads to increased competition at the lower

end.

All categories – biscuits, snacks etc- grew in low single digit in FY17.

Within biscuits, entire value category is shifting – premium cookies categories is

witnessing good growth (Goodday is 60-65% of this category), health category is also

clocking good growth, value category is declining.

GST can lead to some disruption in the short term; inventory in the channel with dip

Distribution

Direct reach has doubled in past 3 years.

Direct reach of 1.55mn outlets at FY17 end .

Direct reach is more than 2x market leader.

Focus has moved from wholesale channel to direct distribution.

Reach close to 4.5mn outlets, while market leader's reach is 5.8mn.

Weak states

Gujarat, MP, Rajasthan and UP grew 23%, 13%, 20% and 9% YoY, respectively, in FY17.

Only ~1/5th of the leader in the Hindi belt.

Britannia is gaining market share in UP.

New products and LUP

Plugging portfolio gap and launched Gooday Wonderfulls (mid premium range).

Also launched Tiger Kreemz.

Launched INR10 SKU in Jim Jam, 50-50 and Vita Marie.

International

Continues to be severely impacted on account of deteriorating geopolitical situation

and currency fluctuations in Middle East and Africa.

Has entered Nepal.

Britannia Industries


Dairy and bread

Focusing on driving products with high profitability and reducing reliance on less

profitable commoditized products.

Clocked good growth in the cheese business. Ghee declined due to lower focus.

Dairy business will stabilize in the next 6-9 months.

Bread business recovered after the issue of Potassium Bromate. However, growth have

not reached expected level.

Margins

Price action was limited in Q4FY17 due to higher competitive intensity and uncertainty

due to GST.

Not looking at price increase before GST.

Rationalized advertising costs and focused on cost efficiency programme.

The company endeavours to maintain margin at the current level for some quarters and

then reevaluate to expand.

Focus on cost savings has increased significantly – looking at 40% more cost savings in

FY18 compared to FY17.

Cost savings of INR1.55bn in FY17.

During FY17 the company did not take enough pricing to cover the entire raw material

inflation.

Q4FY17 ad spends were down 20-25% YoY. FY17 ad spends fell 13% YoY.

Commodity prices softened a tad in Q4FY17.

Will require price increase of 4% YoY to mitigate raw material price inflation.

Chipita

Formed joint venture with Chipita (Greek company) for manufacturing and selling long

life filled croissants. The project is expected to be commercialized by July 2018.

JV with Chipita is 60:40; 60% with Britannia.

Targeting INR2bn revenue with the first line of products in the first 3 years of

operation.

Has done well in Middle East, Egypt etc, and this category is as large as the biscuit

category in some of these markets.

Chipita already sells chocolate spread in some of India's markets.

Capex for this project is INR800-850mn.

Intercorporate deposit (ICD) and royalty

ICD as of March 2017 is at the same level as earlier.

Subsequent to March 2017, it has dipped by INR400mn.

INR340mn is royalty to group companies (0.4% of revenue).

Consumer Goods


Inventory, loans and advances and capex

Inventory has increased due to opportunistic buying of commodities in the inflationary

environment.

In the process of finalizing purchase of property for a food park in Maharashtra, loans

and advances have increased.

Capex for Maharashtra will be INR1bn.

Cash and cash equivalent of INR12bn.

Total FY18 capex is expected to be INR3.5-4bn.

GST

Tax neutral rate for company is 18%.

Tax neutral rate for the industry will be lower by 100-150bps.

Chart 1: Consolidated sales growth

Chart 2: Standalone sales growth

Source: Company, Edelweiss research

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Chart 3: Gross margin (%)

Chart 4: EBITDA margins (%)

Chart 5: Volume Growth


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Volume growth

Consumer Goods


Table 1: Britannia standalone result


Outlook and valuations: Positive; maintain ‘BUY’

Britannia is value leader in the biscuit category (ahead of Parle) and has sustained market

share gains. The company, we believe, will continue to grow ahead of the market in FY18

following deepening distribution, especially in rural areas (total universe of 7.7mn outlets,

of which the company is present in 4.5mn), driving growth in weak states (Gujarat,

Madhya Pradesh, UP and Rajasthan growth has improved and market share has seen an

uptrend) and increasing traction within modern trade segments. The company is also filling

portfolio gap and has entered the premium cookie segment (launched Goodday Wonderfull)

and will be focusing on the cream segment.

With recovery in growth rates of the biscuit industry, increase in market share post GST

(~35% of total biscuits are manufactured by smaller/regional brand players) and rise in

demand led by government measures (7th Pay Commission payout, OROP etc), we expect

FY18 to be better. However, rise in the competitive intensity amidst rising raw material

prices and lower industry growth remain a concern on growth and margins in the short

term. Britannia, however, is targeting 40% more cost savings compared to FY17, which will

protect margin, while rising premiumisation (growth in premium segment is much faster

Year to march Q4FY17 Q4FY16 % change Q3FY17 % change

Net Sales 20,670 19,357 6.8 20,932 (1.2)

Other Op. Income 223 247 (9.7) 234 (4.7)

Total 20,893 19,604 6.6 21,166 (1.3)

Purchse of stock 2,370 2,041 16.1 2,357 0.5

(Inc)/Dec in stock (184) 432 (142.7) (63) 192.1

Consumption of Raw material 10,803 9,427 14.6 10,863 (0.6)

Employee cost 612 540 13.5 604 1.4

Other Expenditure 4,431 4,497 (1.5) 4,445 (0.3)

Total 18,032 16,936 6.5 18,207 (1.0)

EBITDA 2,861 2,668 7.2 2,960 (3.3)

Depreciation 268 240 11.8 243 10.4

EBIT 2,593 2,428 6.8 2,717 (4.5)

Other inc 326 348 (6.5) 370 (12.0)

Interest net 4 3 12.9 4 (2.8)

Exceptional item - - NA - NA

PBT 2,915 2,773 5.1 3,083 (5.4)

Tax 948 855 10.9 968 (2.1)

PAT 1,967 1,919 2.5 2,115 (7.0)

Equity Shares (FV- INR2) 120.0 120.0 - 120.0 -

EPS 16.4 16.0 2.5 17.6 (7.0)

COGS 62.2 60.7 147 62.2 0

Employee 2.9 2.8 18 2.9 8

Other expenditure 21.2 22.9 (173) 21.0 21

EBITDA 13.7 13.6 9 14.0 (29)

PAT 9.4 9.8 (37) 10.0 (58)

Tax Rate 32.5 30.8 169 31.4 111

Expenses

as % of net revenues



than value segment) will boost margin (current raw material inflation remains a key

monitorable, which we believe will be taken care of by price hikes post GST. We assign 38x

FY19E earnings and arrive at target price of INR3,778. We maintain our ‘BUY’ on dips

recommendation and ‘Sector Outperformer’ rating.

Chart 6: One- year forward P/E band

Source: Edelweiss research

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Consumer Goods


Financial snapshot (INR mn) Year to March Q4FY17 Q4FY16 % change Q3FY17 % change FY17 FY18E FY19E

Net revenues 22,444 21,337 5.2 22,820 (1.6) 90,541 102,469 117,178 Cost of materials 13,915 12,878 8.1 14,190 (1.9) 55,887 63,379 72,325

Conversion and other charges - - - 4,660 5,180 5,814

Advt. sales & promotions - - - 7,170 8,125 9,302

Employee expenses 897 873 2.7 882 1.6 3,526 3,860 4,419

Other expenses 4,551 4,684 (2.8) 4,622 (1.5) 6,516 7,211 8,023

Total expenditure 19,363 18,434 5.0 19,694 (1.7) 77,759 87,755 99,883

EBITDA 3,081 2,903 6.1 3,126 (1.4) 12,782 14,713 17,295

Depreciation 322 308 4.5 303 6.4 1,193 1,399 1,609

EBIT 2,759 2,594 6.3 2,823 (2.3) 11,589 13,314 15,686

Other income 335 362 (7.5) 389 (13.8) 1,505 1,156 1,753

Interest 13 15 (10.8) 11 20.0 55 43 42

Profit before tax 3,081 2,942 4.7 3,201 (3.7) 13,040 14,427 17,397

Provision for taxes 973 952 2.2 997 (2.4) 4,197 4,545 5,480

Minority interest (2) - - - 1 1

Associate profit share - 1 (100.0) 1 (100.0) 3 2 2

Exceptional Items

Reported net profit 2,109 1,990 6.0 2,204 (4.3) 8,846 9,884 11,918

Adjusted Profit 2,109 1,990 6.0 2,204 (4.3) 8,846 9,884 11,918

No. of shares (mn) 120 120 120 120 120 120

Adjusted Diluted EPS 17.6 16.6 6.0 18.4 (4.3) 73.7 82.4 99.3

Diluted P/E (x) - - - 46.5 41.6 34.5

EV/EBITDA (x) - - - 31.9 27.4 23.0

ROAE (%) - - - 44.5 40.3 39.8

Cost of materials 62.4 61.0 62.7 62.4 62.4 62.2

Employee cost 4.0 4.1 3.9 3.9 3.8 3.8

Conversion and other charges - - - 5.1 5.1 5.0

Adv. & sales promotions - - - 7.9 7.9 7.9

Other expenditure 20.3 22.0 20.3 7.2 7.0 6.8

EBITDA 13.7 13.6 13.7 14.1 14.4 14.8

Adjusted net profit 9.4 9.3 9.7 9.8 9.6 10.2

Tax rate 31.6 32.4 31.1 32.2 31.5 31.5



Company Description

Britannia is the value leader in the biscuit category and is a 123 year old brand in India.

Britannia has a presence in the biscuit, bread, cakes, rusk and dairy segment. In biscuits the

company has brands like Good Day, Crackers, Nutrichoice, Marie Gold, Tiger, Milk Bikis, Jim

Jam, Bourbon, Little Hearts, Pure Magic and Nice Time. These brands are present in close to

4.5mn outlets. Britannia is focussed on driving growth through its 7 power brands –

GoodDay, Tiger, Marie, Milk Bikis, 50:50, Treat and Nutri Choice. Britannia is present in

dairy with value added products like cheese, yogurt, flavoured milk, butter etc and plans to

go for full integration of this business. Apart from this the company is also present in cakes

and rusks which remain a key focus area. On the international front Britannia exports to ~72

countries and has international subsidiary in Middle East. The company wants to increase

the overall salience of the international business from 5% currently to ~20% over the long

term. Investment Theme

Britannia is expected to outperform the industry growth led by strong innovation pipeline

and distribution expansion. The company is focusing on reducing the gap with Parle and is

driving inroads in the market where it is weak i.e. the hinterland. Britannia is not only

launching new products but also relaunching its key brands (like GoodDay, Milk BIkis and

Tiger) which are yield good results. The company has commissioned its R&D facility which

will also give a boost to innovation. Britannia continues to focus on driving further

efficiencies in terms of reduced breakage, sales returns and supply chain efficiencies –

targeting 40% more savings in FY18.

Key Risks

Increased competitive intensity: Rising competitive intensity (especially from players like

Patanjali) can potentially result in volume pressures. Also, it can result in increased A&P

spends and investments towards the brand resulting in margin pressure. Maintaining

market share becomes challenging in such a scenario.

Raw material prices: Rise in the raw material prices like wheat, flour, RPO, milk can lead to

pressure on the gross margins. Inability to pass on the pricing pressure to consumers due to

higher competition can result in further pressure.

Rural slowdown: Biscuit is a highly penetrated category and slowdown, particularly in rural

areas, will lead to slowing of the category growth rates.

Failure in new innovations and segments: Britannia has a strong pipeline of new innovations

and it also plans to solidify its hold in the dairy, cake, rusk and international markets.

However, failure of new launches and disappointing entry in new segments cannot be ruled

out completely.


Consumer Goods

Financial Statements

Income statement (INR mn)

Year to March FY16 FY17 FY18E FY19E

Net revenue 83,254 89,623 101,569 116,278

Other Operating Income 718 918 900 900

Total operating income 83,972 90,541 102,469 117,178

Materials costs 50,127 55,887 63,379 72,325

Employee costs 3,414 3,526 3,860 4,419

Other Expenses 1,864 2,214 2,438 2,674

Ad. & sales costs 7,378 7,170 8,125 9,302

Conversion charges 4,735 4,660 5,180 5,814

Carriage and distribution 4,310 4,302 4,774 5,349

EBITDA 12,144 12,782 14,713 17,295

Depreciation 1,134 1,193 1,399 1,609

EBIT 11,010 11,589 13,314 15,686

Add: Other income 1,243.5 1,505.4 1,155.81 1,752.88

EBIT incl. other income 12,253 13,095 14,470 17,439

Less: Interest Expense 49 55 43 42

Profit Before Tax 12,205 13,040 14,427 17,397

Less: Provision for Tax 3,961 4,197 4,545 5,480

Reported Profit 8,246 8,846 9,884 11,918

Adjusted Profit 8,246 8,846 9,884 11,918

Shares o /s (mn) 120 120 120 120

Adjusted Basic EPS 68.7 73.7 82.4 99.3

Diluted shares o/s (mn) 120 120 120 120

Adjusted Diluted EPS 68.7 73.7 82.4 99.3

Adjusted Cash EPS 78.2 83.7 94.1 112.8

Dividend per share (DPS) 20.0 22.1 24.7 29.8

Dividend Payout Ratio(%) 35.0 30.0 30.0 30.0

Tax rate (%) 32.5 32.2 31.5 31.5

Common size metrics


Materials costs 60.2 62.4 62.4 62.2

Staff costs 4.1 3.9 3.8 3.8

Ad. & sales costs 8.9 8.0 8.0 8.0

Conversion charges 5.7 5.2 5.1 5.0

Carriage and distribution 5.2 4.8 4.7 4.6

Interest Expense 0.1 0.1 - -

EBITDA margins 14.6 14.3 14.5 14.9

EBIT margins 13.2 12.9 13.1 13.5

Net Profit margins 9.9 9.9 9.7 10.3

Growth ratios (%)


Revenues 10.4 7.8 13.2 14.4

EBITDA 47.9 5.3 15.1 17.5

PBT 50.4 6.8 10.6 20.6

Adjusted Profit 41.5 7.3 11.7 20.6

EPS 41.5 7.3 11.7 20.6

Key Assumptions


Macro

GDP(Y-o-Y %) 7.2 6.5 7.1 7.7

Inflation (Avg) 4.9 4.8 5.0 5.2

Repo rate (exit rate) 6.8 6.0 5.8 5.8

USD/INR (Avg) 65.0 67.5 69.0 69.0

Company

Biscuits and high protein food 11 10 12 14

Bread 12 5 9 10

Cake and rusk 18 10 25 25

Dairy (2) - 20 20

International bus growth 20.4 2.0 10.0 15.0

COGS as % of sales 58.1 62.4 62.4 62.2

A&P as % of sales 8.6 8.0 8.0 8.0

Conversion charges as % of sales 5.5 5.2 5.1 5.0

Carriage & distribution as % of sales 5.0 4.8 4.7 4.6

Other exp (% net rev) 5.5 2.5 2.4 2.3

Tax rate (%) 32.7 32.2 31.5 31.5

Capex (INR mn) 2,077 3,500 3,500 3,500

Debtor days 6 7 7 7

Inventory days 31 40 35 35

Payable days 54 49 53 53

Cash conversion cycle (17) (2) (11) (11)

Dep. (% gross block) 6.7 6.0 6.0 6.0

Yield on cash 17.4 29.8 22.0 18.0



Cash flow metrics


Operating cash flow 9,614 6,961 11,686 11,973

Investing cash flow (7,052) (2,094) (2,344) (1,747)

Financing cash flow (2,483) (4,431) (4,857) (6,037)

Net cash Flow 79 437 4,485 4,189

Capex 2,077 3,500 3,500 3,500

Dividend paid (2,888) (4,450) (4,972) (5,995)

Profitability and efficiency ratios


ROAE (%) 54.7 44.5 40.3 39.8

ROACE (%) 74.4 61.6 55.6 55.3

Inventory Days 31 40 35 35

Debtors Days 6 7 7 7

Payable Days 54 49 53 53

Cash Conversion Cycle (17) (2) (11) (11)

Current Ratio 1.3 1.4 1.6 1.7

Gross Debt/EBITDA 0.1 0.1 0.1 0.1

Gross Debt/Equity 0.1 0.1 0.1 -

Adjusted Debt/Equity 0.1 0.1 0.1 -

Net Debt/Equity (0.2) (0.2) (0.3) (0.4)

Interest Coverage Ratio 226.1 212.6 312.2 373.5

Operating ratios


Total Asset Turnover 5.1 4.3 3.9 3.7

Fixed Asset Turnover 9.3 8.4 7.9 7.8

Equity Turnover 5.5 4.5 4.1 3.9

Valuation parameters


Adj. Diluted EPS (INR) 68.7 73.7 82.4 99.3

Y-o-Y growth (%) 41.5 7.3 11.7 20.6

Adjusted Cash EPS (INR) 78.2 83.7 94.1 112.8

Diluted P/E (x) 49.8 46.5 41.6 34.5

P/B (x) 23.3 18.6 15.2 12.5

EV / Sales (x) 4.9 4.5 3.9 3.4

EV / EBITDA (x) 33.2 31.5 27.1 22.8

Dividend Yield (%) 0.6 0.6 0.7 0.9

Balance sheet (INR mn)

As on 31st March FY16 FY17 FY18E FY19E

Share capital 240 240 240 240

Reserves & Surplus 17,425 21,821 26,734 32,657

Shareholders' funds 17,665 22,061 26,974 32,897

Minority Interest 25 22 20 18

Short term borrowings 934 916 1,073 1,073

Long term borrowings 408 500 500 500

Total Borrowings 1,343 1,416 1,573 1,573

Long Term Liabilities 68 68 68 68

Def. Tax Liability (net) (277) (277) (277) (277)

Sources of funds 18,823 23,290 28,358 34,279

Gross Block 18,067 21,567 25,067 28,567

Net Block 8,210 10,517 12,618 14,509

Capital work in progress 901 1,000 1,000 1,000

Goodwill 1,159 1,159 1,159 1,159

Intangible Assets 1,292 1,292 1,292 1,292

Current Investments 3,965 3,965 3,965 3,965

Cash and Equivalents 4,841 5,254 9,738 13,928

Inventories 4,407 6,125 6,077 6,935

Sundry Debtors 1,706 1,719 1,948 2,230

Loans & Advances 8,995 8,995 8,995 8,995

Other Current Assets 378 378 378 378

Current Assets (ex cash) 15,486 17,217 17,399 18,538

Trade payable 7,420 7,503 9,203 10,502

Other Current Liab 8,051 8,051 8,051 8,051

Total Current Liab 15,471 15,554 17,254 18,553

Net Curr Assets-ex cash 15 1,663 145 (14)

Uses of funds 18,823 23,290 28,358 34,279

BVPS (INR) 147.2 183.9 224.8 274.2

Free cash flow (INR mn)


Reported Profit 8,246 8,846 9,884 11,918

Add: Depreciation 1,134 1,193 1,399 1,609

Interest (Net of Tax) 33 37 29 29

Others 2,884 (1,491) (1,144) (1,742)

Less: Changes in WC 2,684 1,624 (1,518) (159)

Operating cash flow 9,614 6,961 11,686 11,973

Less: Capex 2,077 3,500 3,500 3,500

Free Cash Flow 7,536 3,461 8,186 8,473


Consumer Goods

Peer comparison valuation

Market cap Diluted P/E (X) EV / EBITDA (X) ROAE (%)

Name (USD mn) FY18E FY19E FY18E FY19E FY18E FY19E

Britannia Industries 6,359 41.6 34.5 27.1 22.8 40.3 39.8

Asian Paints 17,205 47.6 38.4 29.9 23.9 33.0 34.5

Dabur 7,585 33.8 28.9 29.0 24.4 27.5 27.7

Hindustan Unilever 35,914 46.2 38.8 32.0 26.7 106.5 113.0

ITC 58,529 30.7 26.3 20.4 17.3 30.5 31.9

Nestle Ltd 9,846 49.3 38.1 27.1 21.3 39.4 41.9

Median - 43.9 36.3 28.1 23.4 36.2 37.1

AVERAGE - 41.6 34.2 27.6 22.7 46.2 48.1

Source: Edelweiss research



Top 10 holdings

Perc. Holding Perc. Holding

Arisaig Partners Asia Pte 2.9 Life Insurance Corp Of India 1.8

Prudential ICICI Asset Mgmt Co 1.7 General Insurance Corp Of India 1.0

Royal Bank Of Scotland 0.9 Kotak Mahindra 0.8

Vanguard Group 0.7 Birla Sun Life Asset Management 0.7

UTI Asset Management 0.7 T Rowe Price 0.6

*as per last available data

Insider Trades

Reporting Data Acquired / Seller B/S Qty Traded

14 Sep 2016 Varun Berry Sell 25000.00

19 Aug 2016 Varun Berry Sell 29430.00

*in last one year

Bulk Deals Data Acquired / Seller B/S Qty Traded Price

No Data Available

*in last one year

Additional Data

Directors Data Mr. Varun Berry Managing Director Mr. Nusli N Wadia Non Executive Chairman

Mr. A K Hirjee Non Executive Director Mr. Jeh N Wadia Non Executive Director

Mr. Ness N Wadia Non Executive Director Mr. Avijit Deb Independent Director

Mr. S S Kelkar Independent Director Mr. Nimesh N Kampani Independent Director

Mr. Keki Dadiseth Independent Director Dr. Ajai Puri Independent Director

Mr. Nasser Munjee Independent Director Mrs. Ranjana Kumar Independent Director

Auditors - BSR & Co. LLP

*as per last annual report


Company Absolute

reco

Relative

reco

Relative

risk

Company Absolute

reco

Relative

reco

Relative

Risk

Asian Paints BUY SO M Bajaj Corp HOLD SU H

Berger Paints BUY SO L Britannia Industries BUY SO L

Colgate HOLD SP M Dabur BUY SO M

Emami BUY SO H GlaxoSmithKline Consumer

Healthcare

HOLD SU M

Godrej Consumer BUY SO H Hindustan Unilever HOLD SP L

ITC BUY SO M Marico BUY SO M

Nestle Ltd HOLD SP L Pidilite Industries BUY SO M

United Spirits HOLD SP H

RATING & INTERPRETATION

ABSOLUTE RATING

Ratings Expected absolute returns over 12 months

Buy More than 15%

Hold Between 15% and - 5%

Reduce Less than -5%

RELATIVE RETURNS RATING

Ratings Criteria

Sector Outperformer (SO) Stock return > 1.25 x Sector return

Sector Performer (SP) Stock return > 0.75 x Sector return

Stock return < 1.25 x Sector return

Sector Underperformer (SU) Stock return < 0.75 x Sector return

Sector return is market cap weighted average return for the coverage universe

within the sector

RELATIVE RISK RATING

Ratings Criteria

Low (L) Bottom 1/3rd percentile in the sector

Medium (M) Middle 1/3rd percentile in the sector

High (H) Top 1/3rd percentile in the sector

Risk ratings are based on Edelweiss risk model

SECTOR RATING

Ratings Criteria

Overweight (OW) Sector return > 1.25 x Nifty return

Equalweight (EW) Sector return > 0.75 x Nifty return

Sector return < 1.25 x Nifty return

Underweight (UW) Sector return < 0.75 x Nifty return



Edelweiss Securities Limited, Edelweiss House, off C.S.T. Road, Kalina, Mumbai – 400 098.

Board: (91-22) 4009 4400, Email: [email protected]

Aditya Narain

Head of Research

[email protected]

Coverage group(s) of stocks by primary analyst(s): Consumer Goods

Asian Paints, Bajaj Corp, Berger Paints, Britannia Industries, Colgate, Dabur, Godrej Consumer, Emami, Hindustan Unilever, ITC, Marico, Nestle Ltd, Pidilite Industries, GlaxoSmithKline Consumer Healthcare, United Spirits

Distribution of Ratings / Market Cap

Edelweiss Research Coverage Universe

Rating Distribution* 161 67 11 240 * 1stocks under review

Market Cap (INR) 156 62 11

Date Company Title Price (INR) Recos

Recent Research

26-May-17 ITC Strong performance; GST to bolster growth; Result Update

309 Buy

22-May-17 Pidilite Industries

Volumes on recovery road; GST to propel growth; Result Update

740 Buy

17-May-17 Hindustan Unilever

Good recovery; healthy mix of volumes and pricing; Result Update

1,009 Hold

> 50bn Between 10bn and 50 bn < 10bn

Buy Hold Reduce Total

Rating Interpretation

Buy appreciate more than 15% over a 12-month period

Hold appreciate up to 15% over a 12-month period

Reduce depreciate more than 5% over a 12-month period

Rating Expected to

-

149

297

446

594

743

Jan

-14

Feb

-14

Mar

-14

Ap

r-1

4

May

-14

Jun

-14

Jul-

14

Au

g-1

4

Sep

-14

Oct

-14

No

v-1

4

De

c-1

4

(IN

R)

One year price chart

2,500

2,780

3,060

3,340

3,620

3,900

May

-16

Jun

-16

Jul-

16

Jul-

16

Au

g-1

6

Sep

-16

Oct

-16

Oct

-16

No

v-1

6

De

c-1

6

De

c-1

6

Jan

-17

Feb

-17

Feb

-17

Mar

-17

Ap

r-1

7

Ap

r-1

7

May

-17

(IN

R)



Consumer Goods

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Consumer Goods

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