INSUBCONTINENT EXCLUSIVE:
ET Intelligence Group: After 14 years, Britannia is re-entering the benchmark Nifty index end of this month to become the third FMCG company
head in 2013, ensured that it performed well in its key food segments, creating Rs 68,000 crore of wealth for investors since.
The
management drove profitable growth through launch of new food categories, growing its dairy business, foray into international markets,
increased at a compound annual growth rate of nearly 10 per cent - higher than its other three peers
Its net profit swelled at a CAGR of 31 per cent - double the rate of increase posted by its peers Godrej Consumer Products (GCPL) and
Marico.
The mid-sized company outperformed its peers GCPL, Dabur and Marico in its performance on the ground as well as on the bourses to
gain an entry into the Nifty.
While Britannia and GCPL are similar on some counts (similar revenues and market cap), Britannia has an edge
It has a higher return on capital employed and a higher free float.
GCPL, on the other hand, has better operating margin profile, but lower
returns on capital employed and lower valuations
Its stock remained flat over the past year even as ET FMCG Index rose 14 per cent and the Britannia stock surged 29 per cent
case of GCPL.
In March 2014, Britannia was the least valuable of the stocks among its peers (GCPL, Dabur, Marico and Emami) and today it is
the most valuable FMCG stock
Trading at 67 times its trailing four quarter earnings, its stretched valuations have rather been a concern lately for the stock
Inclusion in Nifty will further attract buying from index funds and is a long term positive for the Britannia stock.
