Fundamentals

BRITANNIA INDUSTRIES

Ticker: 500825  
BUY: Rs 3,125.55 
Target Price: Rs.3490

Britannia Industries is a food company engaged in the manufacturing of biscuits, cakes and rusks and its food segment mainly comprises of bakery and dairy products. In Q2FY19, the company’s revenue was up by 12.7 percent YoY led by double digit growth in volumes and strong network distribution. EBITDA grew by 20.1 percent YoY with its margin expanding by 100 bps to 16 percent due to better cost efficiency. PAT increased by 16.1 percent YoY to Rs 303 crore. The commercial production at the greenfield unit in Nepal is expected to commence from Q4FY19. During the quarter, it launched new categories, cream wafers and flavoured milk in tetra packs. It has planned capex of Rs 500 crore in FY19 and expects to launch more innovative products. Its reach in rural areas is also getting stronger. Thus, we recommend it as a BUY.

PRAJ INDUSTRIES

Ticker: 522205  
BUY: Rs 122.20
Target Price: Rs.140

Praj Industries Limited is engaged in the business of process and project engineering. Indian government has decided to raise the amount of subsidised loans to sugar mills to expand their ethanol production to Rs. 6,139 crore from Rs. 4,440 crore announced earlier. Praj Industries commands around 70 per cent market share in bio-energy business in India and is the only dominant player, along with ISGEC Limited. Praj’s total expenditure to set up 1G ethanol plant would be around Rs 3,402 crore. Now, assuming 70 per cent market share of Praj Industries, the total order intake could be around Rs.2,381 crore over the next three years. Hence, considering the new blending policy, transformation from 1G to 2G with diversified business and healthy financials, we urge our investors to BUY this scrip.