Scripscan:Britannia Industries Limited
Traded in:Nse-bse
Avg Buy price:660
Target:960
Return percentage:45% plus
Duration:9-12 months

Story:Britannia Industries Limited engages in the production and sale of bakery and dairy products in India and internationally. Its bakery products include biscuits, bread, cakes, and rusk; and dairy products comprise milk, butter, cheese, ghee, and dahi as well as milk-based ready to drink beverages and dairy whiteners. The company offers its products under various brands, including Tiger, Good Day, 50-50, Marie Gold, Treat, Milk Bikis, Nutri Choice, Time Pass, Pure Magic, Little Hearts, Nice Time, Greetings, and Premium Bake as well as Healthy Start. It also manufactures and sells gourmet bakery products, which include specialty breads, cakes, pastries, and cookies through the company’s own retail stores under the Daily Bread brand name.

Recent Organisational changes:Britannia recently has announced key organisational changes to achieve high growth both in the Indian and international market.The company’s managing director Vinita Bali has been entrusted with the task of focussing on international markets and tapping new business growth opportunities.This would allow Britannia to transform into an all-embracing foods company from a company dealing with bakery and dairy products.The company has also drawn up plans to aggressively scale up its international operations and at the same time, increase focus on its large and profitable India operations.As per the changes, the India operations will now be headed by Chief Operating Officer Varun Berry, who recently joined the company.I have got great respect and admiration for Mr Berry,(Ex Pepsi Guy who is known for his aggressiveness and sound decision making qualities)who may well replicate his previous success in britannia.

Recent numbers:A boring company even a few years ago,not able to even recall, if ever, it clocked volumes its doing now in the bourses.A company which in most parameters qualifies to be a hot buy.A mere biscuit company(derives 75% of revenues from biscuits)is all set to transform itself into a food company.With Westlife development(Mcdonalds's franchise) and jubilant food running wild,britania even if it vindicates a part of its claim,could have a great stock future in the coming few years.Britannia Industries reported a 49 per cent increase in net profit to Rs 92 crore for the fourth quarter ended March, compared to the year-ago period. Revenue grew 12 per cent to Rs 1,637 crore.For 2012-13, net profit grew 30 per cent to Rs 260 crore, while revenue grew 12.4 per cent to Rs 6,136 crore. Britannia’s international operations grew 14 per cent during the year.

Attractive valuations:The company has a terrific distribution system reaching an estimated at 5 million outlets.Subsidiaries contributed to an EPS of Rs 2.1 in FY13.BRIT Dairy witnessed a 22% CAGR in sales and 7% PAT margin.The company overall should easily grow by 15-18% CAGR for the coming couple of years.Marketcap to sales is one the prime metrics used in valuing a FMCG company.Hul delivered around 26k crs revenues and commands a mcap of 126k crs(5 times sales).Colgate sales were 3000 odd crs for last fiscal and it trades at 5.9 times its sales.Marico too quotes at around 5 times sales to market cap at its present price.Britannia for some unknown reasons trades at just 1.4 times its trailing sales.Now this gap is not going to last for too long.I feel a catch up play is in the offing.Even 2 times its trailing sales to market cap would lead to a 45% stock price appreciation.That translates into a price of 960 bucks,which is also your target price.