Britannia (BRIT) 4QFY21 result was below our estimates. Standalone revenue grew at 8% driven primarily by volume growth. Shutdown in business operation due to implementation of large-scale digital project impacted primary billing for 3 days in Mar’21. However, this is likely to drive cost-based efficiencies going forward, said IDBI Capital in its report.

Deflationary raw material cost drove margin expansion. Management is aiming to drive aggressive growth of Milk-Bikis biscuits with (i) a new brand positioning of "Doodh Roti Ki Shakti" (ii) a new brand ambassador; Pankaj Tripathi (iii) first time Hindi labelling on products to win Hindi heartland (Milk Bikis so far has been a regional brand restricted primarily to Tamil Nadu and Kerala). BRIT is aiming to upgrade glucose-biscuit customers to Milk-Bikis (benefits of milk and glucose).

The broking firm believes this is a master stroke and BRIT is likely to benefit immensely if successful. However, due to sudden spike in cost of milk and RPO during 4QFY21, we have marginally trimmed our EPS estimate by 3-4% for FY22-23E. "We maintain our BUY rating with a revised TP of Rs 4,395 (vs previous TP of Rs 4,564). We value BRIT at 50x FY23E EPS."

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