ABOUT:
Britannia Industries Limited is an Indian company specialized in food industry, part of the Wadia Group headed by Nusli Wadia. Founded in 1892 and headquartered in Kolkata, it is one of India's oldest existing companies and best known for its biscuit products. The company sells its Britannia brands of biscuits, breads and dairy products throughout India and abroad. It overtook Parle-G in 2015 becoming no#1 biscuits of India.
History:
The company was established by a group of British businessmen with an initial investment of ₹295. Initially, biscuits were manufactured in a small house in central Kolkata. Later, the enterprise was acquired by the Gupta brothers, mainly Nalin Chandra Gupta, an attorney, and operated under the name, V.S. Brothers. In 1918, C.H. Holmes, an English businessman based in Kolkata, was taken on as a partner and The Britannia Biscuit Company Limited (BBCo) was launched. The Mumbai factory was set up in 1924 and Peek Freans UK, acquired a controlling interest in BBCo. During the World War II, the government of British India needed a continuous supply of biscuits for British soldiers. The Britannia Biscuit Company started supplying biscuits to British Army for several years, and the company sometimes devoted 95% of its capacity to produce biscuits for the armed forces. Biscuits were in high demand during World War II, which gave a boost to the company's sales. The company name was changed to the current Britannia Industries Limited in 1979. In 1982, the American company Nabisco acquired the parent of Peek Freans and became a major foreign shareholder. In 1978, Britannia came out with its public issue, and its Indian shareholding had increased to 62%, which firmly established Britannia as an Indian company. The 38% foreign stake was owned by the UK-based Associated Biscuits International Limited (ABIL). Kerala businessman Rajan Pillai secured control of the group in the late 1980s, becoming known in India as the 'Biscuit Raja'. After the Disputes and controversies In 1993, textile tycoon Nusli Wadia of Bombay Dyeing took control of the company from Britannia's then-chairman Rajan Pillai, with the help of French food giant Danone. In 2009, Wadia Group became the largest shareholder in BIL after acquiring a 25% stake owned by Group Danone. Britannia acquired a controlling stake in Kenya's Kenafric Biscuits in October 2022. In December 2022, Britannia Industries entered into a joint venture agreement with Bel SA of France and Britannia Dairy Private Limited (BDPL) to develop, manufacture and sell cheese products in India and other markets. Under the joint venture, Bel SA acquired a 49% stake in BDPL, a subsidiary of Britannia Industries, for ₹262 crore and infused an additional ₹215 crore in the joint venture. In August 2022, the company expanded its product portfolio by entering the Western Snacking market with the launch of its new product, Treat Croissant. The company's principal activity is the manufacture and sale of biscuits, bread, rusk, cakes and Dairy product.
Financials:
Their revenue and profits 20 years back during the year 2003 were 1349 Cr & 99 Cr respectively while today they are able to do revenue and profits of around 16000 Cr & 2316 Cr respectively. Yes, they were able to improve revenue by 10X in just the last 20 years. Consistent performance with continuous cash flow. Great Journey. Investment of 1 lakh should be more than 1 Cr which is 100X along with 1.5X annual dividends on invested amount shows huge wealth creation. I am happy to say that we have been recommending this company for the last 15 years when the price was around 200 & the company was not in Nifty_50. We saw consistent profitability resulting into consistent dividends earnings and 25X valuations, today Britania is the part of Top Nifty_50. Patience is the key to success. Falls are part of Your life. You bought this company when it was in Nifty-200 & today is at Nifty Top-20.
Fy_23 Results:
Delivered robust double-digit growths in Revenue & Profitability and further strengthened market leadership. Strong sales growth which continued from H1 still remained strong with the growth of 15% as expected. Spread is increasing between Britannia and Parle-G market share. Food inflation continues, albeit at a slightly lower pace. Input prices softened this quarter with correction in RPO & Packing material prices, except Flour which is trending higher. Pricing actions were taken to cover inflation. With the softening of material prices in H2 22-23 & stepped-up cost efficiencies, operating margins improved this quarter. Operating profits grew handsomely…. driven by cost
efficiency & benign input cost inflation. Margins improved this year and hence profit growth of 53% was seen. However, PAT for FY 22-23 includes an exceptional income of Rs. 359 Crs respectively, on account of profit from the sale of 49% equity stake in Britannia Dairy Private Limited (BDPL) & fair valuation of balance 51% held in BDPL, pursuant to JV agreement entered into with BEL. Hence the real profit margin should be lower than it actually seems. We can see this year sales growth of 13% & profit growth of 10%.
Action:
All those added or bought during a past fall near 2500 or 3000 can again add during any fall near 3916 and book some 5% Profits in current rally at 5175 expected in near term. Can expect long term 12% growth even in future and hence multiyear rally along with high consistent dividends could be seen.
Associated Biscuits is the Promoter with around 45% stake along with FII with 19.14% Holding & 14.35% with MF & Insurance companies (LIC Child Fortune Plus Fund holds around 5.66% stake). LIC just added 1.2 lakh shares last year around 3200 in their existing portfolio of 1.2 Cr shares.
Their journey to become “Total Foods Company” is progressing well with a good response to new products viz. “Treat Wafers” and “Winkin Cow Milkshakes”.
DISCLOSURE: FOR EDUCATION PURPOSES, DO NOT TREAT AS A RECOMENDATION
