Your Stock Queries

Britannia Industries

Is it the right price to enter the stock from a long-term perspective?
- Harpreet Chawla, Via Email

BSE/NSE Code	500825/BRITANNIA
Face Value	Rs 2
CMP	Rs 747
52-Week High/Low	Rs 773/Rs 445
Current Profit/(Loss)	N.A.

Britannia is a name that is associated with almost all the citizens of India, as they consume its products on a daily basis. Starting off almost a century ago in Kolkata (then Calcutta), the company (a subsidiary of Associated Biscuits International) has expanded to become a name to reckon with. It engages in the production and sale of bakery and dairy products in India and internationally. Some of the well known brands of the company are Tiger, Good Day, 50-50, Marie Gold, Treat, Milk Bikis and NutriChoice, to name a few. It also manufactures and sells gourmet bakery products, including specialty breads, cakes, pastries and cookies through the company’s own retail stores under the brand name Daily Bread.

In the backdrop of this information, let us take a look at the financial performance of the company. Britannia reported impressive numbers for Q1FY14, where its net profit stood at Rs 86.3 crore, marking a gain of over 95 per cent. The PAT figures are around 40 per cent above the street expectations. The strong bottomline performance can be attributed to the better­-than-expected EBITDA margins, which expanded by 251 basis points on a YoY basis. The other factors that have played their part are the other expenses, which came in flat, as well as the sharp decline seen in the finance costs, which went down by a whopping 65 per cent to stand at Rs 3.35. The topline for the quarter stood at Rs 1403.44 crore, up 14.88 per cent on a YoY basis.

On the valuations front, the stock trades at a PE of 32.33x. This looks a bit steep at this juncture and the stock is trading close to its 52-week high. However, the consumption story of India remains robust and promising. Hence, we suggest that you maintain a staggered approach to invest in this counter.

Navneet Publications (India)

I have bought 250 shares of this company at Rs 59 per share. Should I continue to hold these?
- Sudesh Teli, Via Email

BSE/NSE Code	508989/NAVNETPUBL
Face Value	Rs 2
CMP	Rs 53.55
52-Week High/Low	Rs 71/Rs 51
Current Profit/(Loss)	(9.24 per cent)

Navneet Publications (India) touches the lives of a wide student base in the country, as it engages in the publishing of educational, children and general books. It is also involved in scholastic paper and non-paper stationery products businesses. The company offers educational material including supplementary books such as digests (guides) for the students of CBSE and ICSE boards. It publishes books in English, Gujarati, Hindi, Marathi, Tamil, Urdu and other Indian and foreign languages. The company markets its products primarily in India, North and Central Americas, Africa, Europe, Australia and Oceania.

The financial books of the company for the recently concluded quarter have been subdued. The topline was at Rs 395.37 crore, went up by 10.24 per cent on a YoY basis. The bottomline remained almost flat, declining by 1.10 per cent to stand at Rs 71.01 crore. There was a sharp increase in its other expenses, which went up by 63 per cent. The employee cost also went up by 14.51 per cent YoY. This has played spoilsport for the operating margins, which was at 28.05 per cent, down 243 basis points on a YoY basis. The net profit margin too declined 207 basis points on a YoY basis.

Valuations-wise, the stock is trading at a PE of 11.56x and the EV/EBITDA stands at 7.51x. Though you are seeing some losses in your investment at this juncture, keep in mind that this is a leading player in a near-recession proof business. Thus, we suggest that you hold the counter depending on the time frame that you have in mind.
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Asian Paints

My investments have witnessed better appreciation since I have invested in this stock. Should I hold the counter from a longer-term perspective?
- V K Krishna, Via email

BSE/NSE Code	500820/ASIANPAINT
Face Value	Rs 1
CMP	Rs 440
52-Week High/Low	Rs 525/Rs 343
Current Profit/(Loss)	N.A.

It is no wonder that you have seen your investment appreciate in this counter, as Asian Paints has always been a leader in the paint industry. Asian Paints is Asia’s third largest and India’s largest paint company, pushing new concepts like Colour Worlds, Home Solutions, Colour Next and Kids’ World. It operates in 17 countries and has 24 paint manufacturing facilities worldwide, servicing consumers in over 65 countries. The company offers its products primarily under the brand names Asian Paints, Berger International, SCIB Paints, Apco Coatings and Taubmans.

The company has posted a muted performance for the recently concluded June quarter of 2013. The bottomline came in at Rs 275 crore, marking a decline of 4.57 per cent on a YoY basis. The dip in profits can be attributed to higher employee costs, depreciation and other expenses, which went up significantly by 27 per cent, 79 per cent and 22 per cent respectively. The EBITDA margins have dropped by 117 basis points on a YoY basis. The total income was at Rs 2841 crore, growing 11.51 per cent on a yearly basis.

The stock is currently trading at a PE of 38.31x. The valuations may look steep, but keeping the forthcoming festive season in mind when walls receive a fresh coat of paint and property sales spurt, we suggest that you hold on to the counter for two more quarters if you are not in hurry to sell.

Shoppers Stop

I am holding 125 shares of Shoppers Stop purchased at Rs 410 per share. Please advise me as to whether I should hold or exit these.
- Pratik Tayade, Via Email

BSE/NSE Code	532638/SHOPERSTOP
Face Value	Rs 5
CMP	Rs 360
52-Week High/Low	Rs 497/Rs 333
Current Profit/(Loss)	(12.20 per cent)

Shoppers Stop engages in the retailing of various household and consumer products and books through its departmental store chain in India. The Shoppers Stop stores also sell men’s, women’s and kids’ clothing. The company operates 61 Shoppers Stop stores, 13 HomeStop stores, 40 Mothercare stores, 82 Crossword stores, 27 M.A.C. stores, 15 Clinique stores, 6 Estèe Lauder stores and 12 HyperCity stores. What may not be known by many is that the company is also involved in the gaming business.

On a standalone basis for Q1FY14, the company reported a topline of Rs 537 crore witnessing a gain of 20 per cent on a YoY basis. The like-to-like (LTL) sales saw a growth of 12 per cent and the volumes from the same improved 3.3 per cent. Its EBITDA grew 29 per cent to Rs 23.40 crore, while the PAT registered 86 per cent growth to stand at Rs 2.3 crore on a YoY basis. Of course, these gains must be rationalised in the backdrop of the low base effect of the corresponding quarter last year.

The company added five stores during the quarter, taking its retail space to 5.12msf. It opened five stores in Q1 and is slated to open three more in Q2, thus meeting the FY14 guidance in first half itself. The management has indicated an upward revision in store opening ahead, which is a good sign. Though we can see that you are sitting on some losses, but keeping in mind the growth prospects of this company, we suggest that you hold this counter for at least one more quarter before taking any call on your investment.